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CNBC
Oct 5, 2012 1:00pm EDT
we got a doozy right now. jack welch setting off a bit after firestorm this morning. shortly after the report, welch tweeted this out. unbelievable jobs numbers. he doesn't mean it in a positive way. he means it unbelievable. these chicago guys will do anything. can't debate so change numbers. a few moments later, hilda solis fired back. >> i'm very disappointed to hear that. we have a very professional service organization with top officials working in the bls. our most trained and skilled individuals. it is really ludicrous to hear that kind of statement. >> representative allan west is a florida republican and he says he agrees with mr. welch. congressman, good to see you. >> thank you very much. how are you all? >> what do you believe what mr. welch says and not what the secretary of labor says. >> it is not about believing what mr. search says. it is about studying the numbers. we continue to see these inconsistencies and revisions upwards and downwards. work force participation rate still remains at a 30-year low. when you compare this to the u6 computation which takes into a
CNBC
Oct 5, 2012 7:00pm EDT
, i think they'll be l. >> hey, larry, huge interview tonight. you have jack welch, what else is cooking? >> 7.8% unemployment. is this magic number of president obama for real or was it cooked? good evening, i'm larry kudlow. this is "the kudlow report." team obama doing a victory lap, rejoicing over the 7.8% victory lap. my guest, jack welch, is questioning whether the numbers were cooked to help president obama. mr. welch will respond live and talk to me in a moment. this whole thing comes as the romney roll continues. scott rasmussen has three polls showing a dead heat in battle ground states, hai, virginia, florida. even the liberal magazine "the new yorker" sees it on their front cover, mitt romney pulling a clint eastwood, debating an empty chair. first up, it was the tweet that was heard around the world. my good friend jack welch set off a social media firestorm. take a look at his tweet. "unbelievable jobs numbers. these chicago guys will do anything. can't debate so change numbers, end quote. he's chase by accusing the white house of skewing the data to help president
CNBC
Oct 5, 2012 4:00pm EDT
. here's what the former general electric ceo jack welch tweeted. unbelievable jobs numbers. these chicago guys will do anything. can't debate, so change the numbers. >> plus, arizona senator and former republican candidate john mccain saying this on cnbc earlier today. >> i question exactly what those numbers are. our discussion about the w.a.r.n. act that just took place where they're in blatant violation of the law. i wouldn't put anything past this administration. >> by the way, the w.a.r.n. act he refers to requires businesses to tell employees about potential layoffs 60 days in advance. here with reangction, former lar secretary elaine chow. thanks very much for joining us. you were the labor secretary. you had the national butreau of labor statistics under you. what do you think about this possibility of a conspiracy? >> when i was at the department of labor, i think the bureau of labor statistics was very professional. they did a very good job. i don't know what's happening now. i can't speak to that. but the fact that this administration has delayed the issuance of these legally m
CNBC
Oct 5, 2012 9:00am EDT
week, but we did get numbers mixed and consumer confidence is good and unemployment and yet, jack welch, the former ceo of general electric as you just mentioned on squawk out on twitter today. he's been obviously critical of the white house for years now, but he says unbelievable jobs numbers. these chicago guys will do anything. can't debate so change numbers. that's the former head of a very large company. >> i'm on tv, and i remember jack sent me a fax when i was first on with mark haynes. i like you. i love jack. i'm trying to reconcile jack with the numbers because i trust jack and think he's terrific. i come back and say listen, they've been wrong -- he's jack. i don't think that they're phony. it doesn't make me feel that jack is off the reservation so much that i think that this particular issue -- i disagree with him. i read the tweet and i was, darn, jack, come on, man. >> let's say good is good. >> does this mark the turning point and we had david come out this morning where he was establishing 1575 and that's quite an upside for 2013 particularly if he's standing by a year-end t
CNBC
Oct 5, 2012 6:00pm EDT
euros wait for a break of 129. >> rebecca. >> buy canada and sell the yen. i like big bird too. >> that's it for us here on "money in motion." friday at 5:30 p.m. eastern. have a great weekend. >>> i'm jim cramer, welcome to my world. you need to get in the game. he is nuts, they're nuts, they know nothing. i always like to say there is a bull market somewhere. "mad money," you can't afford to miss it. i'm cramer, welcome to "mad money" to cramerica. other people want to make friends, i want to make you money. my job, not just to entertain you, but to educate and teach you. 1-800-743-cnbc. why didn't today's rally hold up, despite the better than expected unemployment number. with the dow closing 35 and s & p declining .74%, declining. and the nasdaq sinking? it's because earnings season is next week. and people are convinced that earnings will be subpar. as someone who fares high every stock prices, all i can say is hallelujah! you couldn't have a better setup. when everybody thinks the quarters will be terrific, you better believe you are going to be hammered. but so far we've had disappointments from very high-profile companies. intel, federal express. they have helped set the barlower than would otherwise be. and that's a good thing. so what's the game plan for next week? many markets are expecting downside surprises. and a major impact psychologically and allows to us be more forgiving to companies that offer inline guidance. those companies who hurt their own stocks by not raising estimates on the call. with inlooid guidance, they can get off scot-free. and it is about reduced expectations. two unusual aspects to the earnings season. a lot about the fiscal cliff and an excuse for everything to missed sales to not take chances. we are going to have to an hial on a case-by-case basis on who means that the business could get hurt by the fiscal cliff. and second, we'll get a surprising tail wind. no one is talking about this. the dollar has been akrendiasce. most make forecast on where the dollar was last when they reported. given that a weak dollar leads to higher earnings as companies that do overseas sell their goods in stronger currencies, there will be more profit than you thought. the f corp was on. they pegged everything on 122 euro, and now it's 129, 130. the market is surprisingly stupid about these things. and amidst all the gloom, we could see earnings that beat expectations, because they were set using a different exchange rate. w wow. that might have been the dollar. no, they will say it's a good quarter. it will be set off by two quintessential american companies that are having things dictated in part by china first, alcoa, the old aluminum corporation of america and on tuesday afternoon, and i think that while the company is operating surprisingly well, earnings will be hurt by hig high-chinese aluminum. they don't want to set down their plants, because it would layoff huge numbers of of people over there, and they are afraid to do that. alcoa sells very hot marks, aero, automobile, and gas turbines, and don't forget because of its recycling qualityiqualit qualities they work in cans. and they make the beautiful aluminum ipad skid. the aluminum in construction is awful. t alcoa is hard pressed to get to the mid teens. where it would be if china weren't producing 5 1/2 million tons of aluminum it doesn't need. we'll also hear from yum brands. it's as american as kentucky fried chicken. judging by the slowdown in nike shoe sales, the colonel probably didn't sell a lot of chicken. kfc doesn't taste like a nike sneaker, but it's about people's moods. i bet it isn't bad. i like yum in the lower 60s. wednesday morning, earnings from cost come they got me thinking i'm too negative about the stock, but if there is one point i must never stop driving home here, owning expensive stocks risky in an environment when chipotle could be down 100 points. remember that day? that day changed my mind. rain in the risk, even if it means the reward will be crimped. unlike the movies, in real life, greed is bad. michael douglas and more importantly kirk douglas are huge fans of the show. i met them, i'm not kidding and i can just say as a kirk douglas fan, that's as great as it gets. i would link kirk's book if this were amazon, but it's a tv show. safeway meeting reports on thursday. so many -- this is the quarter. anyway so many people have tried to call the bottom in the stock, and all they have is thousands of shopping cartwheel rots on their backs. i'm thinking safeway will be like the checkout line, ten points or less. whole foods, not even that expensive when you factor in the growth rate. a re-enactment of safeway's quarter. okay. now, after the close thursday and this j.b. hunt transport, the trucking company, i don't spend enough time talking about how the truckers are doing. i'm used to the poor performance of a group i don't use much. and the transport index can move the overall market, it gets better. unlike fedex, ups, they aren't hit by asian and european slowdowns and don't carry two cargos with declining car loads, crops and coal. >> all aboard? >> no. you want big? friday is big. big, big, big. we have arguably the best international and best domestic bank reporting. jpmorgan, wels fargo. i'm critical at jpmorgan, which means i'm no locker wanted at parties i didn't want to go in the first place. the rub has been astonishing. i wouldn't be afraid to cut some back. the charitable trust, still a large position. the exact opposite coufor wels fargo i think it will be stronger than we expected. i'm focused on germany. let me tell you why. no one wants to see weak numbers anywhere. pain, job loss, but european cooperation, it began when the pathetic data from poor countries caught up with richer countries and the richer countries realize they are not immune to the crisis, and we should pay attention to the number that comes out monday morning. if it's bad, more chances we need some reports, and anything out of china is good is welcome. we need bad from germany and bad from china. and finally, fedex, investor meeting on tuesday and wednesday. we are of perhaps the mistaken opinion that all of the bad news is out of fedex and the company will have something positive to say. we have plenty of negative analysis going into it. even tepid analysis could be welcome. going into earnings season, everybody is expecting companies to report lousy results and when the bar has been lowered, stocks can go higher, even on news that's only decent. and i don't think they will get it. let's go to chris were. >> caller: hey, jim. big booyah from westchester, new york. >> my sister is up there. tell her i said hi. >> caller: i will. zynga and activision. do you think that activision could have a record fourth quarter? >> i don't like that division or that business. zynga too early to get into zynga. >> let's go to steve. steve-orino, you're up. >> caller: nice to meet you. >> how are you? >> caller: first off, i'd like to thank you for encouraging investors to manage their own money. if i can do it, anybody can do it. my question, to the t-mobile, psc deal. i would like to know, how will this affect the telecon industry? >> this is my theory on it. thank you about the kind words. i think t-mobile will merge with psc and bring it public and that will get it off telecon sheets. that's important. they don't want anything to do with t-mobile and that this is a way out. i don't think it will affect us so much. >>> ike in new york. >> caller: hey, jim. how are you? >> real good. how about you? >> caller: good, good, good. a big apple booyah to you. my question is about the comments shorting because of the taco bell competition. i find it difficult to compare the two. should i feel good about chipotle, go with yum? >> i like yum in the low 60s. i don't think it's taco bell that's causing problems at chipot chipotle. it's a little expensive. business isn't that good it will look smart, but you'll never know, because you are never going to see numbers of how many people went to taco bell that used to go to chipotle, but chipotle is heavy and the multiple is high. i don't mind it here deep in the money calls, that's all. earnings season is back. the good news, already a lot of bad news, the bar has been lowered, so, therefore, the expectations are so much easier to beat. i had have to analyze case by case who is out by them and who is telling the truth about the fiscal you cliff. >>> coming up, precious plan? the fed has the printing press working overtime, but could the dollar's dilution help book you a ticket to a pot of gold? an exclusive with the ceo of sandstorm gold is next. >>> later, smart speculation, as science and technology converge, ground-breaking developments in medicine continue to emerge. cramer's zeroing in on one biotech speck that could be on the verge of a major move. all coming up on "mad money." >>> don't miss a second of "mad money." got @jimcramer on twitter. have a question? tweet cramer at #madtweets. send an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this. on gasoline. i am probably going to the gas station about once a month. last time i was at a gas station was about...i would say... two months ago. i very rarely put gas in my chevy volt. i go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and it's not just these owners giving the volt high praise. volt received the j.d. power and associates appeal award two years in a row. ♪ >>> i'm always telling you you need to own some gold. that's been real good advice, given the tremendous breakout the precious metal. you have had to buy actual gold bouillion. if you don't want to lug around the gold bars, there is the eft, which mirrors the price of gold. gold miners, too many ways they can screw up. these companies are dealing with problem after problem after problem, which is why i stopped recommending them ages ago. but last week for speculation friday, i highlighted a company that represents the middle ground, a way to profit from increased gold production, and the company is sandstorm gold. it invests in gold mines, when a miner needs capital, sandstorm gives them money up front for a percentage of gold they produce in the future. it's like a banker for gold miners, which can have a hard time getting financing. in the week i recommended the stock, i think it's still a good play. this a complicated business model many of you are unfamiliar and need to be walked through it. tonight, we'll hear from sandstorm ceo about how the industry really works and management does work tremendously. you have to pick the right gold mines, let's talk to nolan watson of sandstorm gold to learn more about how his business works. come on in, man. >> thank you. >> thank you. >> i'm a bank and i see gold is going higher, why can't i do what you do and cut out and say i know what? i'm going to go in with these guys. >> banks barrow money, and they can't take on the same amount of risk. at sandstorm, he with are 100% equity financed. we can sign a contract, be in a contract the next 40 years. >> why can't the gold miners issue equity and get a good return? >> often they do. we have been able to get a lot of deals, where the management of the gold mining company own a lot of stock, so they feel the pain of the dilution associated with giving the equity. >> that makes a lot of sense. we profiled franklin navarra. how many of these pseudo banks can have you? >> franklin nevada, they are close to $10 billion market cap. and so is where i used to work. we're just a billion dollar market cap. no one between discuss the other guys. we'll work in that niche. >> why don't they get all the good prospects and you guys get -- you go to places where -- as the ceo of rangold told me,sissies don't go. >> this is material to us, not material to them. we don't have to compete for that. >> why can't i -- give you this question. all the questions i got after i did franklin nevada and your company. why can't i do that business? why can't i raise that money and pick a gold miner i like? >> there is a significant amount of experience and this is the hard part of the business, which deals to do. there are a couple of guys that have started trying to make a business like this, and it just bought absolutely terrible assets. >> you know that, because your years at silver wheaton. >> exactly. and when we go to a mine and do due diligence, the average age of a guy we send is 70. they have a lot of experience. they tell us what to do, whatnot to do. >> what if gold goes down? >> it will reduce cash flow. we buy gold at $400 on average and sell it whatever the market price happens to be. the beauty of the bits model, we can never lose money. and go f gold goes down, there are a lot of gold miners that will be losing money. we'll be making less. >> explain why you don't end up losing money if gold goes to $1,200? >> absolutely. the contracts, the way they work, we buy gold at a fixed price, and it's prenegotiated, in the contract, and the average price is $400 per ounce. we have mechanisms in the contract to say if for some crazy reason gold goes below $400, we buy it lesser the market and that price, so we can't lose money. >> i think you could throw off a lot of cash. franklin nevada talked about the dividend. are you seeing that or in growth mode? >> this creates free cash flow, and we have told shareholders we will become a dividend paying company. a significant amount of growth for the next 24 months. we want to get through the next major push of growth and declare dividends. >> let's talk about where gold is going. you have seen the show, we're giant bulls of gold. you think gold can go to $2,000 in the next year? >> absolutely. i would be surprised if it didn't. >> that is because? >> right now the politicians in the u.s. and politicians in europe, combined with central bankers are my best friends, they keep printing more money, more money, more money, and as they do that, people move to gold, and the price of everything is increasing in u.s. dollar around the world. >> how is it that all of the gold miners we talked to, the getting it out of ground, the actual supply, so much hard than when we started the show seven years ago? >> a lot more competition, and a lot more things like truck tires, cost $30,000 for a tire, which used to cost $2,000 to $3,000 per tire. they are getting bigger and bigger and bigger means more complex, more problems. >> you're in a lot of countries. you're in brazil, in canada. is there gold -- other than antarcti antarctica, are there still gold mines that are worth it? if we went out to nevada -- would it be worth it? in mexico, a ton of gold mines that were closed because gold was $200. if we get to $2,000, will lots of mines open? >> the expiration right now, the gold mines are much lower grade gold mines, you have to build much bigger mines, they are more complicated to build, and they are not economic to build. there is lots of gold to be found in nevada, but every time they find it, it looks like an uneconomic gold mine. even if it is, it will take ten years to permit it in nevada. >> i think you have that great niche. so glad you watch the show and came on, these are the kinds of companies that need to be bought, if you don't want to own the gld. i don't want the individual risk of the gold you deal with. thank you to sandstorm gold. it had a big run since last friday. if you like gold, sandstorm goes higher. >>> coming up, smart speculation. as science and technology converge, ground-breaking developments in medicine continue to emerge. cramer is focusing in on one biotech that could be on the merge of a major move. >>> remember that therapeutics, the tiny biotech stock that like tripled on wednesday. incredible move. it seems like the easy money has already been made, but other biotechs have the same type of thing going and have potential to give you similar gains. i doubt that any others go up 199% on the day. what could be the next cerepa? if you speculate on high-risk, high-reward, the sweet spot is those who develop orphan drugs, drugs that help people who suffer from extremely rare disease with there is no cure, but it's a small case. serepta has developed a drug that helps people who have muscular dystrophy. they will be able to charge hundreds of thousands of dollars a year for a course of treatment if the fda gives its seal of approval. you want to put on your daddy war bucks hat. get your hands on as many orphans as possible. the more the, the merrier. i want to circle back to another orphan drug. rt x. v vertex pharmaceuticals. i recommended this stock two years ago as a hepatitis c play with the cystic fibrosis kicker. it has had a 73% gain. but the thesis has now flipped. vertex is now a cystic fibrosis play with a possible hepc particular. and that's better, because cystic fibrosis is a terrible, uncurable, genetic condition that messes up the body's ability to regulate sweat product, certain aspects of digestion and mucous that fills up your lungs, which makes it hard to believe and ultimately destroys your lungs. a terrible disease. a disease that affects about 30,000 people in the u.s., 70,000 around the globe. a pretty large population for an orphan drug to treat. back in january, vertex got fda approval for a drug that helps cystic fibrosis patients with a specific gene mew tigs, present in 4% of patients. but experimental drug called v x 809, which helps to improve lung function from half the people who suffer from cystic fibrosis. vertex came out with very bullish data on v x 809. $20 in one day. 55% move. remember this is biotech, people. and that was interim data from a phase two study. v x 809 with the drug not only worked, but worked really well. it seemed like the stock would be up multiple days. but they gaffed investors, may 29th, saying they had screwed up the data analysis. the actual data was still pretty good, not as good as originally reported. not only bad news, but it called question into management competence. and they quickly lost 7 points. let me say, i do not like that vertex misinterpreted its own data and took nearly a month to correct the mistake. a seriously amateur move. unacceptable. that said, i think the opportunity is simply too good to ignore. i'm swallowing that kind of, since the company made out with more positive incremental data, and the market agrees. vertex slowly and steadily climbing up to 53% and change. it will take a year for the trug. once that is done, and the fda approves this could be a multimillion dollar blockbuster. colidico costs $250,000 a year for treatment. the company could probably charge the same amount for v x 809. assuming that vertex changes $200,000 for v x 809 that could mean $6 billion annually. how much could vertex be worth? $6 billion from cystic fibrosis drug is equal what gilead makes every year, it's a $52 billion company, and, of course, a big chunk of that is the in the pipeline. and let's say vertex and cystic fibrosis might be worth half of gilead, $26 billion, you could still catch doubles from here. that won't happen overnight. it could take several years. how about alexon. and it's currently doing a billion dollars, we like it so much on this show, you know that. it's growing like gang busters. if vertex could be $6 billion in sales, doing comps here, the company worths to be worth at least as that of ale x ion. the data may turn out to be less positive. everything leads me to think that the drug will get approved. i am trying to put numbers on things. vertex, a catalyst on things. on thursday, it will present its final two data on the north american cystic fibrosis. once we get final results, that will allow the company to put the worries about the misinterpretation of the interim data behind it, and based on what we've seen so far, the data next week will be pretty darn good. i want to get ahead of the conference, but only if you can stomach the risk. bottomline? the lesson from serepta? it pays to invest in biotechs who are developing orphan drugs? just remember, if you buy vertex ahead of the conference, are you speculating, and maybe steepen the money calls out nefrl months. if you are risk averse, you can't afford to wait. this drug won't hit the market, if ever, for over a year, if you don't feel like playing the converse, then we have ages to wait for a pullback and then and only then buy the vertex. >>> let's go to greg in michigan. how are you. >> caller: go tigers, by the way. >> i love the tigers. >> caller: jim, can you give me your opinion on tag health care, buy, sell, or hold? >> i don't like the hospital business. if i want to get in health care, i am always going to do the same thing. i will tell you that i like hcn. that's health care that bought sunrise senior living and universal health services. let's go to jill in new york. jill. >> caller: booyah. hey. >> hi. >> caller: hi. the stock is currently trading near a 52-week high. they have a long history of selling short of wall street targets, but the company is tapping on an aggressive new strategy. pssi has received mixed reviews, and there is a potential takeover target by ups and investors buy the stock at $26 price target and goldman sachs see little hope for pssi, and instead said $18 price target. you be the tiebreaker buy or sell the stock? >> the ak, we did another one of these things with costco. let's too this. i think it can wait, jill. next week, i'll look at the positive and negative and we'll make a decision. i don't want to say one or the other. i'll do the work and come back. >>> greg in new hampshire. >> caller: big booyah. health care and the i.t. space. what do you think of surna. >> last quarter from cerner was not great. it has to deliver great quarters to maintain the momentum. i'm backing away from cerner. this is not a new position. and in regard to shortfall, but when they are a momentum stock, they have to shoot the lights out. you don't have to. the open drug business is very big. if you think the cystic fibrosis drug will be good, then have you a terrific speculation going. this is the real deal. don't move. >>> coming up, send cramer an e-mail to madmoney@cnbc.com or tweet him at #madtweets, and he might answer you on the air on a new edition of mad mail. mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. and i'm here to tell homeowners that are 62 and older about a great way to live a better retirement. it's called a reverse mortgage. [ male announcer ] call right now to receive your free dvd and booklet with no obligation. it answers questions like how a reverse mortgage works, how much you qualify for, the ways to receive your money, and more. plus, when you call now, you'll get this magnifier with l.e.d. light absolutely free. when you call the experts at one reverse mortgage today, you'll learn the benefits of a government-insured reverse mortgage. it will eliminate your monthly mortgage payments and give you tax-free cash from the equity in your home. and here's the best part -- you still own your home. take control of your retirement today. ♪ ♪ >>> it is time. it is time for the lightning round. we play until we hear the sound and the lightning round is over. are you ready, skedaddy? start with rob in new york. >> caller: how you doing, jim. my question about sketchers? >> sell, sell, sell. it's sink'ing like a stone. i don't want skechers or deckers. > >>>. >> ken in california, what's up? >> caller: thank you for your help and guidance. love your show. jim, a vnbbott labs, is it overbought at this point? >> we were discussing this, i say you can't buy it here, steph. have to let it pull back. let it pull back to the mid 60s, but it is going to split. a great situation, but you're paying up too much right here. fred in new york. fred. >> caller: fred in new york, booyah. cypress semiconductor? >> oh, fred. we can say the same thing about intel. intel yields 4%. i see no reason to own cypress. i want to see the quarter. not an apple supplier, and by the way, apple, apple acts terminal, but i don't think they are. i can't own cypress. >>> linda in new jersey. >> caller: booyah from morristown. >> i have to get to the urban table later. >> caller: my stock c bnbs corp. >> 20 million a year for "i love lucy," that's the kind of business i want to be in. >>> greg in new york. >> caller: cramer, how are you? >> i'm good, how are you, my friend? >> caller: hanging in there. i'm not going to give you a booyah. i'm going to congratulate you. been with you since the first show. >> yes, yes. >> caller: with that being said. >> that's nice. >> caller: before i go and give you the ticker, i know where you're going to go with it. one other thing. congratulations on your third round pick, because once vick goes down, have you no idea how great nick vols is. >> san antonio guy from west lake high. he has a connon for an arm. totally agree with you. in the pocket, 6'6", we have to focus on stocks. >> caller: i had to give you that. all right, with that being said, the stock i'm going to give you is not an airline and i know you know of it, it's air castle. >> just the opposite of nick fols. that airline leasing business is not for me. dodi in florida. >> caller: boo, boo, boo, booyah. >> as long as you don't call me zelda. >> caller: victor group. >> i like the yield. by the way, my favorite is p.m., philip morris, and that's the conclusion of the lightning round. >> the lightning round is sponsored by t.d. ameritrade. ♪ hit me baby one more time >> this is you what need to know. this is supposed to make people a lot of moo law. the only one problem, it doesn't. i call these kind of patterns love blankets. something to make you feel more secure. even as it's nothing more than a piece of clothe. like my baby when i was going out. give you comfort when there is no reason for it. nothing but a lovie blanket. check that. that's when the quarterback considers whom he should pass the ball to. >> hmm. >> i'm going to keep the ball myself. >> wow. >> ludicrous. okay. oops. here we go. ball, i'll just hold it. new york style and old london. here it is. always old london. a brand i know. american staples, particularly in the cramer house. i love this. i always have this. i have these in my closet. >> bagel crisps, and melba toast, which is what i feel like right now. greatest brand. j.j. flats, i'm j.j.c., these should be mine. i love these. >> i love melba toast. cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade. >>> before i answer your tweets today, a lot of homework this stuff, i'm stumped on a lot. that's a lot. joy asked me about generac holdings. it makes home based generators. it is the market leader in this business and entering the commercial business with the first cost-efficient opposite for small and medium sized businesses. a good company. is it a good stock? sells 11 times earnings, 12.6% long-term growth rate. that's positive. we miss aid special $6 dividend they gave in june. a lot to like going forward. generac had a great market, despite the housing market. we want to power it up. thanks, joy. this was just a terrific idea, and thank you for bringing it to my attention. i reiterate, our viewers are the smartest viewers on any show. on tuesday robert called about 3-d systems. at that moment, the chart made they that there was something wrong with the company. i decided i needed to analyze the fundamentals, since then, 3-d popped 5%, still down 16% in the last 30 days. what's going on? this company makes 3-d printers to use to make functional parts and products. they can make parts in their office rather than sending them out to production. i bet 3-d printers will be everywhere in ten years. why is the stock so weak if it's so great? simple. one word. competition. jpmorgan sees a direct threat to the business from form labs which may even take share from 3-d systems whole product line in the future. and they only met expectations, rather than beating them. and that is unacceptable for a high-flying stock that trades 25 times next year's earnings. absolutely cool. doesn't mean you should own the stock. see this quite often on the show. cool product, bad stock. i recommend this one. look, here is what i recommend you do. stay on the sidelines until we get signs that the company's revenues are accelerating again. and then maybe we can get it on tuesday, mark in maryland asked me about gourdmanrdman's stores for you home gamers. how the company has been doing lately. i didn't have the month in front of me. 78 stores selling apparel and home decor in 18 states, mostly in the midwest. this is selling a wide array of merchandise 60% off department and specialty home price stores. kind of intrigued me. it turns out earlier this week, gordman's lowered revenues and earnings, due to a decline in same-store sales. only kohl's was that bad. the cut was driven entirely in a decline in traffic, that's terrible. and markdowns seen since labor day, that's worse. look, i'm surprised by these results. i thought g-man was in the right spot as a regional and national player, but a negative comp is troubling. take a pass here, although i will sanction taking the g-men over the browns this weekend. all right. let's answer some of your tweets. over to my mark. this is a mark. try to give you tv instruction, kind of like the hashtag thing. first tweet from@l. barto 777. what is your position for guess? coming in with a high end line in november. coors, coackors, coach did well. >> i have stumbled on guess many times and do not like it. it's an aspirational brand that people have aspired to, and then kind of stopped aspiring to. next tweet from @kylenew york man. he tweeted. a web bush an his raised price tact on buffalo wild wings. a little late? yes, late, but this is better late than never. why do i say that? i say that because i think buffalo wild wings has been suffering from high-cost wings. wing prices go down, that stock will see $100. "mad money" back after the break. >>> not everything is political, for heaven's sake. we had the addition of 114 sn,0 jobs, hourly earnings higher than expected. nice revisions up from previous months, showing in particular that the report from august had understated the amount of job creation going on. i'm putting all of this data in flat, dry terms, because it's flat and dry. not much to it. no drama. a stock market bull, good to see unemployment below 8%, the lowest since the beginning of 2409, but far worse than a half dozen years ago, neither encouraging nor discouraging when you have to worry about the upcoming fiscal cliff. this solves the mystery of how retail could be so robust. here is what got me. because i gave the dry summary on the area, i was instantly the target of the anti-obama crowd, because i didn't call into question how the unemployment number got below 8%, i didn't suggest that number might have been rigged to look good for president obama. i was pillared as a house man owned by the democrats. please! look, my philosophy is crystal clear. you can't look through it. don't bother. you can't question its authenticity. you can't say it's political, and more importantly, can't question its legitimacy for one party without questioning it the other. i understand the accusations from partisan people. they feel robbed of one of the best talking points, unemployment rate stubbornly above 8%, to attack those who accept the number and don't offha offhandedly accept it is wrong is outrageous. i don't like how the number is put together. i would outsource the compilation number, and you can calculate data much faster and more efficiently. i look at the labor department the way i looked at replacement referees in the nfl. terrible, but nonpaerrtisan, equal-opportunity mistake makers. the numbers i take at face value your honor obama and the same way i did for the republicans in power the previous eight years. this is like the criticism i received from hilda solis, it was considered softball. why i didn't ask her why she isn't following up on governor romney's idea, we might create 4 million jobs. that's hardball, not softball. what's good is good, no matter who is in office. those numbers were good. not much more to it anyone who says i am being partisan is out of their mind. what a shame that the charge can be even made, let alone made by people i respect. honestly, people, more to life than who wins in november. stay with cramer. i love you, james. don't you love me? i'm a robot. i know. i know you're a robot! but there's more in you than just circuits and wires! uhhh. (cries) a machine can't give you what a person can. that's why ally has knowledgeable people there for you, night and day. ally bank. your money needs an ally. [ "the odd couple" theme playing ] humans. even when we cross our "t"s and dot our "i"s, we still run into problems -- mainly other humans. at liberty mutual insurance, we understand. that's why our auto policies come with accident forgiveness if you qualify, where your rates won't go up due to your first accident, and new car replacement, where if you total your new car, we give you the money for a new one. call... to talk to an insurance expert about everything else that comes standard with our base auto policy. [ tires squeal ] and if you get into an accident and use one of our certified repair shops, your repairs are guaranteed for life. call... to switch, and you could save hundreds. liberty mutual insurance -- responsibility. what's your policy? >>> seconds away on the kudlow report, is the 7.8% unemployment rate for real? everyone says no, but what if the economy is getting better. think of it. you know who says it's not getting better? jack welch. he'll tell me why in a moment. despite the rally since 2009, investors have yanked hundreds of billions of dollars out of the market. is there a lost generation of investors? can they come back in.
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Oct 5, 2012 6:00am EDT
>>> good morning. welcome to "squawk box." i'm becky quick along with joe kernen. andrew ross sorkin is on assignment. joe told you it is jobs friday, so let's get right to the expectations. forecasters who were polled by dow jones, they say the economy likely added 118,000 jobs last month. the unemployment rate according to the dow jones poll is seen holding steady at 8.1%. reuters consensus is calling for 113,000 jobs and the unemployment rate of 8.2%. meanwhile ap using 113,000 jobs and a jobless rate of 8.2%. that would make that 111,000 for the ap. well have complete coverage of today's reports. we have a trio of experts who are standing by to join us in just a few minutes. michel michelle girard. and in the next hour, jared bernstein and tony fratto. our guest host this morning is fx concepts chairman john taylor. after we hear the number at 8:30 eastern time, we'll talk about what the news means for the obama and romney campaigns. our ges both served as chairman of the economic advisers. austan goolsbee and ed lazear under president obama. but first this morning's headlines. >>> you wanted music but you didn't pick this? >> no but it didn't bother me until you started mocking it. >> she want us just to talk, no music. >> let's get to spain and its finance minister. sparking laughter from an audience in london today, why he told a group of academics that his country doesn't need a bailout at all. that's interesting. the minister is arguing that madrid's reform program right now is already sufficient to stave off a full sovereign bailout and the ecb's bond buying program would suffice. to help spain recover. that's apparently how it started, with -- you can imagine -- that's bad for confidence of the minister of spain where he's telling an audience, we don't need a bailout and then you hear a whole auditorium laughing. morgan stanley is warning that more pay cuts are coming. in an interview with the ftc, james gore man said more job cuts and smaller bonuses are planned next year as the bank attempts to boost shareholder returns. i'm handing this back to you. you deal with it. this is your idea. >> this is how we do it. we'll pretend, we'll play along, in corporate news, sony is halting sales of it experian tablet a month after its launch. there are gaps between the screen and the case and makes it susceptible to water damage. >> facebook had requested the transfer, investors argue that they lost money due to nasdaq's it technical glitches and they're accusing facebook of selectively disclosing unflattering information to analysts who then shared it with privileged investors. and federal and state authorities are reportedly investigating credit suisse over mortgage backed securities sold by the bank. a civil fraud case was file order monday over mortgage backed securities originated and sold by bear stearns. >> but they're all bad. and they're unsettling. and if i'm getting all this bad news, i'd almost rather have some calming sort of -- >> zen music? all right. let's play some zen for joe. zynga is slashing it full year outlook for a second time. the company blaming the poor performance of its live internet games and the write-off of an acquisition. zynga has lost three quarters of its market value since going public back in december. this has been a huge mess. time and time again, people leaving its games that have been so popular. a lot of questions about that. pre-market, down 19%. >> every day we've read this same headline here. american airlines scrambling on fix the seats. i heard over 50 flights have been canceled. the airline has come up with a fix and has begun pulling planes out of service to make repairs. work will be done by tomorrow, but again, not great timing for american airlines, in bankruptcy, trying to avoid a it takeover. p. >> a story you definitely gont wa you don't want that music playing, the scary music. >> why don't we get a poll from our voter. you can either -- a >> viewers. >>erviewers. twitter or squawk e-mail box. >> do you like the calming music or the unsettling music. >> or no music. go ahead and vote. or ticker tape. a, b, c or d. ticker tape music is this. scary music is is the bell. >> this is scary. unsettling. this is just -- because news normally is scary and unsettling. so this is calming. >> let's take a look at the markets. the big question obviously will be 8:30, just under 2 1/2 hours away. 8:30 is when we get that jobs number. until then, the markets are hanging in, up about 13 points for the dow futures. nasdaq also indicated higher. we did see big gains yesterday. dow up 80 points after bouncing all over the place. in europe today, my guess is that they are also kind of waiting to see what happens here in the united states with these numbers. do you have that news coming from the spanish finance minister. at this point, the ftse, france, german dax all indicated up by less than 1%. in asia overnight again, this is the last day that the chinese markets are closed for that one day holiday that lasted a week. right now the nikkei closed up by about 31 points. sensex down by close to 140 points. oil prices up by another $12.84. so back at $90.98. an awful lot of volatility. ten year note yielding 1.679%, that yield creeping slightly higher. the dollar if we take a look, you'll see it is up again the euro. it's up against the swiss franc, down against the yen, but the euro trading at 1.30. so first time i've seen above 1.30 in quite a while 37 gold price which is have been climbing ever higher, to this point just down slightly. $1791.60. >> william congry, died 1729, a play wright from england, wrote probably his most famous -- one of his most famous plays, the mourning bride. 1697. music has charmed to sooth a savage breast. the first line of the play. it is always misquoted as beast. and the has appeared as hath. time for the global markets report. today fittingly is global james bond day. the 50th anniversary of the world premiere of the first james bond film. dr. no. and oo ross westgate is trying his hand at bond this morning. that was receipt cool animation. you should see our chairs animation where we look like three dweebs walking around. that was at least good. oh, look at that. do you have a monitor? we have you in the -- >> eye. >> wow. >> thank you, m, for that. i will try and proceed with my mission. i'm here to tell you where european markets are. >> it's all green. now i see a little red. why are you happy today, what's happening? is it because it's the beginning of baseball season over here? i mean of the playoffs. >> naturally. you know that gets a the lot of focus here. >> if the bat isn't flat and the game totally not understandable that lasts 15 hours, do you have any interest in it over here? >> there's always a winner, right, in baseball. you don't get any draws, do you, which is a little confusing to us. >> i can't believe that you would ever compare that game, what is it, cricket? you wouldn't compare that to baseball. i'm trying to get you to do that so you look silly on james bond day. >> no, no, we're okay. we are at the best sessions, joe, maybe because it's 50 years since the launch of dr. no. and despite the spanish finance minister being snickered at yesterday, i'm not sure the last time he had a bit of a snicker, but it did happen. and i think we have to understand there's a difference between spanish politicians talk between a bailout which is sort of the thing that greece, ireland and portugal got and what they think they're asking for, which is a condition light assistance. they would argue there are two sort of distinct things. we also heard more today on that as reuters report suggesting how the ecb if it ever does get under way, that they would buy heavily for one to two months and then they would necessarily pause for a month and see if the country could access the markets. so we have this theory that held come in heavily and then see how are you getting on. we know of course the ecb is very much in the comments saying it's down to the governments. they have to fulfill their requirements. so here we are at the best levels of the day, as well, and indeed euro-dollar is up above 1.50. and spanish bond yields, still just below 6%. italian yields fairly contained, as well. so it's all about the employment report today which leaves -- somebody has mysteriously left what looks like a martini glass. i'll come back into the light. shaken, not stirred. >> man, does he look the part. >> yes, you do. i wonder who could be messing with your lights. thrush? no, not spectrum, spec ter mayb. it was mostly just the russian, right? >> and i remember the later ones more. >> i see oo 7 at the u.s. open tennis all the time. that's where sean connery hangs out.7 at the u.s. open tennis all the time. that's where sean connery hangs out. looks like we're going down a drain. the show has been going down the drain. that's a good pose there. shaken not stirred. thank you, ross. we'll see you later. have a great weekend. if you have satellite tv, could you probably get the reds game maybe. >> maybe. >> we are in count down mode this morning. jobs report due out at 8:30 eastern. we are joined this morning by michelle girard. you have about eight names. people remember your face. we've made you famous. get recognized once in a while? >> sometimes. >> and we have it other guy who gets recognized for his ties. fao chief economist and federated investor chief equity market strategy phil orlando. how are you? >> i'm fine. >> we've been going on for 20 years i think. >> feels like that. >> what's your number today? >> 120. we were discussing it earlier. we're very close to consensus. there isn't a lot that suggests the labor market has changed very much and that's why we're all with the recent trend. >> my forecast 120 for the jobs and participation rate somewhere around 42%. which should bring the unemployment rate down to about 5. are you looking for 5? >> the participation rate at the start -- >> 42% seasonal factors. election factors. >> demographics. don't forget, we have the baby boomer age which is actually a true factor. >> are you forecasting 5.9? >> probably not. >> i bet you we get 7.9, don't you think? >> today? >> eventually, yeah, but not today. >> is that a conspiracy theory? >> exactly what it is. we're at 8.1. >> is this obama metrics? a special gauge for the metrics? >> phil, you're talking hundreds of thousands of jobs where you finally get down to this net number and then you got all these other assumptions that go into the participation rate. and there must be 100 assumptionses th s thathat go i. >> you're sitting with a 30 year low. you could easily throw another couple hundred thousand discouraged workers in there and bring the number under eight. the metrics that we look at, in the post war era, no president's ever won re-election with it under 7.3. so there's no way we're getting down to 7.3 in the next month. >> it's following what we now call the great recession, whether that's accurate or not, and that makes it different this time because it's a lot of people still say -- you heard bill clinton, he put it in -- it's almost emblazoned now. >> four years ago, it deid feel different. >> now we are hearing that no one could have done better in job growth and that perception was supposedly different. we had people come in here that were thinking '80 was even worse. >> the new standard. we failed so this is good. >> the one thing that is helping the president is the rebound in home prices and the fact that i think -- because actually consumer sentiment is on the rise in the last couple of months. and i think a lot of that is that people are reading that home prices are getting better, they feel there's a turn in that market. and i think that's playing it, as well. the unemployment rate is still stubbornly high, but people don't feel all that bad and i think that's one of the reasons the stock market is doing well. >> the question is how many people are participating. >> front page article in the journal this morning is that despite the fact that we're sitting at a four year cycle high, we're up 120% from the bottom, you've still got net outflows in the equity market over the course of the last year. now, our firm is one of the few firms that have actually seen slightly positive net equity flows, but most of our friends at the other firms are telling us the money has moved out. >> 1.36 billion or something moved out. >> yeah. >> one important person who is still participating in the stock market. bald. has a lot of influence at the central bank. came from down south. expert on the depression. >> yes. >> as long as bernanke is participating in the stock market, it will go up. >> you don't want to fight the fed. >> interesting thing about that story is that you have the story about the stock market, how well it's doing, how people are exiting. and the fed chairman is out there with the short skirt and pom-poms waving for people to get in. >> you have to be stupid, right? 40 billion a month? it flows downhill. why would it flow into 0% stuff when you have 4% yielders. >> a large part what he's trying to do is create this wealth pact. why do do you want to get in front of the train. just ride the wave. >> he's pushing people out the risk curve. you haven't seen consumer mortgage ratings come down, but in the marketplace, again, people are just not able -- they're doing to the mortgage market what they did to the treasury market. they're moving in to other products. and truthfully, too, it's pushed people also helped the real estate market, as well, because don't forget, a lot of people in the low interest rate environment, investors are looking and buying up a lot of these homes, looking at that as a way to get yield in here. so not only is it helping stock, it's helping the housing market and that's that wealth effect people are talking about. these are the two areas bernanke knows are vital to how people feel and the confidence factor. >> but this is cart before the horse economics. the stock market is supposed to go up because the economy is going up. and when you push the stock market up artificially and hope the economy will come behind it, i think that's very dangerous. i'm very uncomfortable where that. i liked the stock market more before i saw the fed in there as a cheerleader. when the fed's doing something you kind of have to look at the other side of risk and now i'm getting worried that the fed is doing this. >> you could careless why it's going up. >> from a valuation standpoint, we're certainly getting ac litte stretched. 14 1450 was our number and we're essentially there. you look at the economy, housing is certainly working. autos is search working. consumer has come back. the piece that's concerning right now is manufacturing is in the dumps. that's probably not going to pick up until we see some improvement in the eurozone situation or emerging market growth because that's impacting for the end market demand for a lot of our exporters. so everything is not cranking. there are still pieces of the economy that are disconcerting. >> what's your number today? >> i'm looking for a headline of 150. >> and then the rate, you don't -- >> 8.1. >> just stay where it is. >> yeah. >> you don't think participation rate comes down? >> well, it could. it's very hard to predict that one. i try to understand why it's doing what it's doing. but you have a lot of different trends. you have the male trend, female trend and the teenage trend. the female participation rate has stopped its structural ride. the male rate has been following since the 1950s. so there are things in this report that in the participation rate that are some long trends and then there are these new structural trends, the baby boomers, and so i think we can understand things that are going on and why the number is different, but it's still disconcerting. because to me it's the jobs number that are disconcerting. >> to keep going down and down and down -- so females are staying, men are -- are they killing us off still, is that continuing to happen? it's a fact. >> arsenic. >> the bigger story is the fact that aging -- >> you're look right at me. >> you are soon going to be in the low participation rate age. but as more people are moving into the category that the 18% participation rate -- >> tell him. >> i'll talk to him. >> you can talk to me. thank you all very much. we appreciate it. always good to have everybody in studio like this. when we come back, we'll talk more about your friday morning sports report and the weekend weather forecast. 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[ all ] i'm with scottrade. zagat just gave hertz its top rating in 15 categories, including best overall car rental. so elevate your next car rental experience with the best. it's just another way you'll be traveling at the speed of hertz. >>> it is time for your daily squawk sports report. let's start off with baseball and a new playoff format. two wild card match-up, st. louis at atlanta and baltimore at texas. they'll decide which teams advance to the next round. thursday night, rams ending the cardinals unbeaten run. 17-3. the rams totally nine sacks, their most since 1998. >> no. >> yes. a big shout out to the rutgers scarlet knights. it is blackout day at the stadium. everybody in attendance is expected to be wearing black including the team. they have new black jerseys that are out there. big game. rutgers 4-0, ranked in the top 25 since the first time in 2009. speaking about rutgers big win at arkansas, first year head coach says he's proud of the football team and now the challenge to take the success that we've had to build on that -- >> you're quoting -- you have that long quote from the first year coach, too, just because you went to rutgers? >> yes. and i'm wearing black today in honor of the scarlet knights. >> unbelievable. >> let's get to the weather forecast forecast. alex wallwallace, i'm sure he's fan, too. >> can't say that. bulldogs are my team. >> that's okay. >> all right. east coast looks like we'll be pretty good here for our friday, enjoying dry skies. it's back across the eastern lakes and into the midwest where we to have a bit of rain to contend with. snow still going on across the northern portions of the upper midwest. light snow in those areas and then we head to the west coast where all is looking perfect. vak are a men toe, 77, seattle right around 70 with sunshine. squawk will be right back in a bit. >>> international air transport association expects global profits to reach $7.5 billion next year. that's more than a 50% increase over this year. but even with these promising projections, 2013 profits will still lag behind the $8.4 billion airlines made in 2011. iata cites the economic mess in europe, oil prices and doubts about the global economic recovery. for a break down of how airlines are doing by region, check out roadwarrior.cnbc.com. up. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again. mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this. for the spender who needs a little help saving. for adding "& sons." for the dreamer, planning an early escape. for the mother of the bride. for whoever you are, for whatever you're trying to achieve, pnc has technology, guidance, and over 150 years of experience to help you get there. ♪ >>> saw todd's on later today. didn't go to miami, but from -- >> he worked down there, i think. >> he is on the wrong side. >> yeah. he'll be on at 7:30, right? >> yeah. >> good morning. and welcome back to "squawk b " box." jobs report, expectations are all over the map. forecasters saying 118,000 jobs. unemployment rate holding steady at 8.1%. roit reuters looking for 113,000. they're looking for a rise to 8.2%. ap using 11,000. >> pretty tight range. joining us to talk about the importance of the1,000. >> pretty tight range. joining us to talk about the importance of the data, furs jared bernstein and also tony fratto. gentlemen, welcome. how important is this number? is this the most important number or is it the number that voters get just a couple days before they walk into the election booth? >> at that point if you're not pretty much locked down, i don't think any particular number will change your mind unless it's wildly off the kind of averages we've been seeing. and a strong number today would obviously change the conversation a bit. so i know thatle folks will be watching it very closely. my expectation is pot that different from the ones you were just showing. you get a sense w450i8 the adp was kind of strong, it came down from last honesty. month. about 20,000 less in september than october. unemployment claims have been volatile volatile. ism gave you a little hope on the manufacturing side. so i think probably the consensus is about right. >> i know it's crazy to look at a number that is a lot of times revised down the road. >> jobs created number is a tough number to consume. it affects how we react. so the new it is ths that ameri from us and market watchers who react to it, they pay attention to the jobs created number. it will go down through a lot of revisions and definitely a down message last month. but the rate is really interesting because there's some noise around there. i did disagree with jared on one thing. we said the claims number has been volatile. it's actually been elevated at a fairly high level at around 375,000 a month. it's not consistent with high job growth. i joke a little bit that unpacking my adjective for the jobs report that we have run out of words to describe it. words like tepid and lackluster. ho-hum. we're running out of words to use to describe a number that is right around that range. it's not high enough to bring down the unemployment rate. if we get consensus again, we're right back where we are, which is not a great story for the administration to tell and still some traction for the challenger governor romney to talk about about. >> national journal had an interesting article out called defying grat ifvity. the poll numbers for the president are certainly not particularly consistent with the kind of statistics that tony just accurately described. so in a way we put a lot more emphasis on these numbers and month to month results that the president will somehow doing better than that. and i think a lot has to do with momentum. so as long as he's posting a positive number on jobs that's at least north the of 100, whic last month wasn't -- >> i talked about that earlier. he gets a pass on what he inherited and what he didn't. are you playing paul ryan with have not -- because i hope it's not going to be in a high altitude -- i don't know whether vice president biden is also affected fwhi thin air, but hopefully you've got it at a sea level place. apparently tony, romney was training in the mountains around boulder and he had all his blood cells -- >> one of the funniest things i ever saw. >> the altitude affects romney differently. i think he breathes a little more. >> he's taller. >> maybe he trained for the debate in denver. right some remember max company city? >> i'm glad you're entertaining yourself. >> all preparation that matters, right? >> it is. jarrett, what do you think, are people underestimating the vice president's abilities with paul ryan? >> if they aren't, they shouldn't. he's quick on his feet. he's good at linking things to a narrative. i can't imagine he would want to go into the weeds with paul ryan and talk about budget baselines. he'll talk about the kind of narrative, the middle class, the folks that he believes -- >> the ones buried in the last four years? >> i think joe biden really does connect with average voters in a way most politicians don't. and i think it will be tough. >> tony, you and the steelers, man. anything happens to them, and i got to hear from you. >> i have not had a chance on air to congratulate you with the reds. amazing season. >> thank you. they're 5:1 odds. i think the nationalses are slightly above that. but i checked the game is saturday 8:38. i'm so excited because last time i got to the playoffs, remember what happened? they got no hit. i'm like watching it, waiting for a hit. i waited and waited and there never was one. anyway, gentlemen -- go ahead. >> what's that, football? >> listen to you. >> i know you'll have chuck todd on later today, but on this question, if you look at like some of the expectations from the wall street journal poll, on the feelings about the economy and the jobs numbers, what we're seeing in that poll, and i'd love to get chuck's thoughts on this, is a break down in the way republicans and democrats think about the economy. where you see it almost all on the democratic side an improving economy that's discording with what the fed sees and what the other people see. i'd love to hear chuck on that. >> we'll bring it up. thank you, jared, thank you, tony. >> kind of on the topic of politics, hospital stocks took a big hit yesterday after mitt romney's strong performance in wednesday night's presidential debate. i looked at a couple. author of the book health care investing, he were of currently fund manager at a investing company with a focus on health care. >> yeah. >> they did come back by the end of the session yesterday to some extent. what was the rationale that if romney gets in, obama care goes, so people will go back to the emergency room where the -- someone pays for it, but the hospitals get hurt anyway. >> right. simplistic trader thing. obama loses, obamacare goes away, 30 million all show up at the hospital and don't pay the bills. >> and the hospitals, they're results over thes past 0 years have been negatively impacted so-tsto what extent? >> it's changed over time. it's gotten worse as people have had to pay more of their insurance bills, but something like 1300, 1400 basis points of uncompensated care. >> we know that -- what is the percentage before obamacare of people covered in the u.s.? is it 80% by some insurance? >> it's been going down since way before obama. since late '80s. >> in terms of health care inflation, what percentage is caused by the group of people that are uninsured and go to the emergency room? >> relatively shawl. i don small. a lot ft of inflation, 5% of pee are -- >>s it is a small part of health care inflation. so when we hear the reaction nael that something had to be done because there would be exorbitant increases because we're all paying supposedly for the people that go to the emergency room, that's a -- that's not true. >> it's partially true. unfortunate unfortunately, health care costs are a complicated issue. the current law doesn't do very much explicitly about health care costs. eventually somebody will have to reduce the volume of services or reduce the price of services. >> so what are you telling investors, buy hospital stocks, don't buy hospital stocks, by the good ones? how do the insurance companies fair? >> insurance companies win almost no matter what happens. so that's fine. >> there's medicaid advantage. >> right, medicaid, medicare. >> is there a head k medicaid advantage? >> medicaid hmos lose it if obamacare gets repealed because they're going to expand medicaid, as well. >> expand it greatly. and it's not block grants. a federal expansion. so what's your favorite stocks? >> my favorite stocks are the ones that are not that impacted by federal policy. united health, intuitive surgical. genetic analysis companies do well. but not completely unrelated to reform. and you can always go outside the u.s., too, if you want. so i guess you're not moving to france if about obama wins. >> alec baldwin didn't move, i'm not moving. we say things when we're upset and then we don't really ---now, if babs moves, i might go with her. >> when we come back, the countdown to the jobs report. we'll be asking the man who runs bond investments for fidelity what the numbers could mean for the markets. >>> monday, facebook and "squawk box" collide. quiche in touch with joe, becky and andrew. get updates and check with the anchors. interviews, news and upcoming events will be posted to our page daily. like the show and stay connected. 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[ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. ♪ >>> joining us, bob brown, fidelity investment bond group. did you see the journal piece, investors jump off the junk pile, totally overheated. is that your view? >> the junk market has had a tremendous run this year. up over north of 12%. at the end of the day, i think investors are still looking for some level of income appreciation and the junk market is doing that. high yield companies have never been in better shape from a balance sheet perspective. and cash flows that they're providing. p so we continue to see the massive capital gains that we've seen or the run up in price appreciation that we've seen this year. probably not, but i think it's still a diversification. >> what kind of current yield can you get on an average junk bond? what's average, bb or something? >> bb. you're going to -- right now investor grade index spread is at approximately 140 basis points. rallied from 241 basis points. >> so what could i get? what percent and then maybe hope for maybe a little capital appreciation, but hopefully no capital loss. what kind of yield can i get? >> high quality bb bond should be trading right around kind of the 4% to 5% to 6% range depending on the sector involved. >> you can almost get that in at&t or something like that can't you, and just common stock any guess there's more risk obviously. junk bonds aren't nearly as attractive as they used to be. >> given significant appreciation they've had this year, i think you've seen a nice rally. >> would you buy any treasuries at all right now? >> treasuries have historically provided four functions for investors. one is income and you can still get that, but i take your point well. certainly muted. two is principal preservation. and three is diversification from other asset classes. the last one is a significant run up in price appreciation or capital gains. that will be more challenging in 2013. >> we'll check back with you in a couple weeks on all this stuff especially the junction stuk st. >>> when we return, hugo chavez facing the toughest election of his 14 year rule. win or lose, michelle caruso-cabrera will have plays that u.s. investors are k. make money on. ♪ [ construction sounds ] ♪ [ watch ticking ] [ engine revs ] come in. ♪ got the coffee. that was fast. we're outta here. ♪ [ engine revs ] ♪ accolade overdrive. zagat just gave hertz its top rating in 15 categories, including best overall car rental. so elevate your next car rental experience with the best. it's just another way you'll be traveling at the speed of hertz. >>> welcome back. hugo chavez will face his toughest challenge this weekend since his rise to power. michelle caruso-cabrera joins us with the story. >> so it's a close election, which surprises everybody. it's probable that he wins but it's possible that he loses, which is pretty big news. venezuelan bonds have been moving dramatically as a result of what's -- they've been actively traded. let's bring up the one-year chart and we can show you first of all they're actively traded because they have very high yields, one of the few places you can get high yields. if you're thinking this is a country that can get a lot of oil you can get 10% on venezuelan sovereign oil. huge rally, when people thought hugo chavez was dying, people were going to be more willing to invest, then the big drama with the european debt crisis which pushed all interest rates higher. we've seen it come down. if we were only going to show you a one-week chart which we can't because of the way our charting system works, things started to sell off because people are nervous about what happens this weekend. jpmorgan has done a breakdown of probabilities and possibilities and what would happen to the bonds as a result. they think that it's possible that the election is so contested that we see rioting in the street next week. there's a 15% possibility of that, they think the bonds sell off dramatically. if however the opposition wins and he's allowed to take power, this 40-year-old guy caprilli, you have a massive rally in the bonds. they break down five possibilities. he wins, and he's allowed to take power. he wins, he's not allowed to take power. he wins, there's some constitutional breakdown, et cetera, chavez wins decidedly, he wins only by a little bit. >> is he like a regular like a capitalist or is he -- >> caprilles, yes. he's run on reinvesting in the oil company which chavez hasn't done. he's looted it for all of his social programs which haven't been effective and they've seen declines in production. >> is this guy running on taking back some of the things that people are getting done? we have the same election here. is he a candidate saying you're not going to get as much as you were getting? >> except if you've lived under a guy for 14 years and didn't get what you promised you'd get, a brand new house, water running to your brand new house, paved roads, et cetera, et cetera. so you're going to vote for the guy who said he's going to give you all the stuff but hasn't? >> paved roads are good. >> especially if you've been pumping oil for decades and kads. >> people in cambridge, massachusetts w robert f. kennedy. >> it's unbelievable, he's not joking, hugo chavez gives one of the counties. so there is a high beta trade but a lot of people own the bonds because they've got high yield. >> thanks, michelle. >> see you later. >>> coming up, september jobs reports is 0 minutes away. we have john taylor to join the conversation next. so can we get back to work, please? >>> we're counting down to a critical employment report. >>> fx concepts and john taylor on where he thinks the numbers will come in and what it means for your investments. >>> martin o'malley, maryland governor, on what his state is doing to generate jobs. the second hour of "squawk box" begins right now. >>> welcome back to "squawk box." i'm standing up, so pay attention. i'm joe -- i'm joe kernen, along with -- >> crank, crank, crank. >> i'm joe kernen along with becky quick. here's a look at today's line-up. john taylor joins us as guest host, bottom of the hour, nbc's political director chuck todd will talk politics and a little bit about that big game that nbc is carrying on saturday against the hurricanes and the fighting irish. and at 7:40 eastern, president obama surrogate maryland governor martin o'malley, big, big political future for this gentleman joins us on the quest to create jobs in america. look at that guy. he looks like a guy of the big future. at 8:30 eastern the all important jobs number is out. steve liesman, to get on tv he'll do anything, he stands up whenever we ask him to. he gives us a preview in a minute. you got your mikes on? >> i have my mikes on. >> and after the wall market reaction. >> you won't stand up. >> i will not. the economy and your money, ed lazear and austan goolsbee. i'm glad we got ed to match up with austan. in the past we just have austan. we'll get to becky who gets to sit, with the morning headlines. comfortable over there in. >> it's very comfy. your my partner and in solidarity i'll stand for you, joe, ready, just for you. good morning, everyone, we've been watching the futures and they are slightly higher ahead of the big number we've been waiting for. dow futures up by 21 points, s&p futures up by two points. everything is waiting for 8:30 when we get that jobs report. let answer get to some of your morning headlines. morgan stanley is planning to cut more jobs and slash bonuses. the ceo james gorman tells "the financial times" those are necessary to improve value. he is sympathetic the industry is overpaid. >>> samsung is reporting a record quarterly profit of $7.3 billion, nearly double the figure last year. they expect the current quarter to be more difficult as samsung spends more on marketing and escalating competition from apple. >>> american airlines says the jets they pulled from service should be back in service tomorrow. they pulled 48 to inspect and make repairs to loose seats. several flights made emergency landings because of the loose seat problem, something they're trying to get fixed quickly. steve. or joe? >> he's standing for a second segment. does your contract say no standing? >> we're at the agent after the show, he's on my speed dialer. today's job report, major implications for the presidential race, senior economics reporter -- >> you can't walk and read. do it again, start back here. senior economics reporter -- >> bob pisani -- you're not going to walk. that's not in the contract. >> what do you want to talk about? >> i want to talk about the most important number for the federal reserve and political debate going on now, it's 23 million. you know number, 23 million. >> i do, u6. >> the u6, we'll break it down so that everybody understands what we're talking about and how to think about it politically. >> steve, are there people that are working one hour a week -- >> yes. >> -- that are employed? >> i'll give you the definitions. i want to you go back, sit down, relax, get a pencil out, take some notes. so you'll never miss any of this. >> i'm working a solid 15 a week. >> you're in just before and out right away. you would count. what's interesting is you would both be employed -- >> 15 hours a day. >> you're marginally attached but that's another story. >> can i go? >> that would be a more mental thing than physical thing. >> can i go? >> you can go. get out of here. wait, there's a chair. you stay right there. all right, let's go through the numbers. greco in the back is freaking out on time. august unemployment rate 8.1, joe was convinced there was a conspiracy it would be brought down to 7.9. >> 5.9. >> excellent, and the september adp. very few, i can't say nobody, really changed this number here because of this number. they practically ignored it. let's look at two gauges of the lackluster recovery or jobs recovery we've had. joe, two line charts. >> got it. >> the unemployment rate, the number that's 8.1, the bottom. and this is the top one here, the u6, broader measure of slack. two things -- guys, go back, they're hurrying. oh, beautiful. they got this big gap between the two, what does that tell you? a ton of extra slack beyond the unemployment rate. also watch them move together so from an investment standpoint what that's telling you is there's no new information. don't look here to find out where that's going to go and they're really moving together but in terms of the fed when they say inflation is going to stay low this is a big part of what they see, this massive slack. look at how we get from the unemployed to the underemployed. >> i'm blocking people out. i can't see now. >> it's down 1.3 million, marginally attached 14. he's got a ride swathe so you're unemployed if you have no job and looked for work in the last four weeks, then you're unemployed. you're marginally attached if you want a job and looked for work in the past year. you're part-time for economic reasons if your hours were reduced or you want a full time job. let's look at these things. 8 million here, 756 down. this looks good, right, there's your 23 million people. those three components make up the 23 million. that looks good. not so good when we look at a broader perspective. real quickly we'll go through this and can we get to the next chart? becan. come around here, kernen, all the way around. here's where we were in october '09, come down to 14.7% but this is the 15-year ample. let answer put numbers up into the next picture. we're 2.5 below october '09, the peak but 4.3 still above the 15-year average. come over here to the unemployment rate, same thing, down 1.9 and 2.2 above. joe here is what i think is interesting, this is a real good sign of the new normal. this is the 15-year average of the unemployment rate, 5.9% but we've had five years or a huge amount of time above eight so what does that do to the average on a 15-year, it raises it. you would come down if you x'd out the five years the more normal rate would be 4.9%. what is the right gap here? the problem is worse than it appears even looking at the chart. >> bush/clinton you can get the number and it's 5.3. >> 5.3 or 4.9, if you take out this recession. you don't want to take it all out, maybe take out the magnitude of it. where we need to go back to is a debate for the fed and the markets as well. >> i wish you had a participation rate that was adjusted for demos and just so we could compare apples and apples. >> i'm working on that. the trouble is, joe, it's hard to work with government data. it's really become -- >> not that hard. watch what they're able to do today. >> i've been working on this. i'm trying to find how much of this is old folks retiring, seniors -- old folks is the wrong word these days and kids dropping out going to school. there's a piece of each one. >> i wish we could have that standardized number for what the participation rate is in, i don't know what normal is, and so then we could figure out exactly where we are and what it feels like to people. because if we went back to the participation rate where we were five years ago we're at 11%, what it feels like. >> you don't have to really know that number. you see our all-america survey. only 10% of the economy say it's excellent. >> can i stand up so people can see -- >> how much taller you are and how much more hair you have? do we count the three inches we have from pumping it up? it makes you 6'5", so the five inch edition. >> i get the thick one. >>> do you remember john taylor, was it a year ago, becky, when he said we were going -- >> i don't think it was that long, 10, 11 months ago. . >> the recession where it's back-to-back, that's the only definition, which you pointed out that is not the definition. you wonder whether he could claim victory, that we really have been in a weak enough period where he was right about the general, the overall feeling of what would happen in the economy because it's lousy. >> there's nobody -- when you have numbers like that, think about it. as you said, one hour you're part-time for economic reasons. i want a full time job or my hours were cut from the job that i had. that's a huge cohort. other people said i want a job and i've only looked a little bit in the past 12 months. that's a huge cohort. then there's the 13 million normal cohort we have tremendous slack, that makes the fed optimistic or sanguine or not worried about the inflation problem. >> romney said someone talked to him, had four jobs in the past six months but didn't want any that he had. >> if they worked in the past four weeks they would not be unemployed. in the survey. >> john taylor has a lot of money under management, currency expert, knows about gold, been in the markets more than 30 years we'll have his take on emerging markets, europe, the u.s. economy and he's going to be standing with me next. >> i'm not sitting, i'm standing. "squawk" will be right back. >> comments, questions? send them to @squawkcnbc on twitter, follow the show and look for updates from andrew, becky, joe and the "squawk" staff. "squawk box" on cnbc, and on twitter. ...what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ...nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this. >>> check the futures ahead of the big jobs number staying close to 13,500 today, futures up about 19 points and that's for once you just see the futures and that's the number because the fair value is basically at zero. our guest host is a squawk master and one of the leading authorities when it comes to currencies. don't mind us. we're just trying to do a lot. joining us is john taylor, of fx concepts. there's another john taylor one of our guests. >> he was one year behind me in college. >> no kidding. >> yeah, amazing. >> you're both great and cover things completely differently, but i crave information from both of you. so life is going quickly because i thought it was like a year ago when you said we're going back into close to a recession. that was 18 months ago. we did slow down, that was the spring when we had the first time and it got a little bit better and another spring swoon and i've been defending you saying that this is not much of a recovery, so to say it's a recession, you could argue philosophically that you were right, that it never really did. if this is a recovery, it's kind of mute but it did get better. now where are we? >> i don't feel like i was right. i feel like i was wrong. >> you do? you wanted an actual recession of back-to-back quarters of negative growth? >> i felt like bernanke has done a fantastic job of keeping this floating along. not great but floating along. >> you're saying that in a positive way that he did a fantastic job? we're not building some bubble somewhere? >> oh, no, we're building a bubble. looking back on it, hey, life's been good, less people unemployed and but we're building a bubble. >> was it the right move for him to keep us floating along or not? >> yes. i mean you always manage for the short term, but long-term we're all dead. >> but it took a long time for to you come out. i understand it's a nuanced question. there may be people talk about eggs being a four-letter word and someday you have to full back. >> exactly and that point of time is getting closer and closer. is it five years away? is it six months away? can't be sure. but in fact it probably is closer than it is further. we have to face up to the reality of the fact. >> what's going to determine it? is it going to be inflation that pushes their hand, is it going to be the bond market that pushes their hand? >> maybe it's going to be politics. certainly we're going to screw things up and that's going to make things happen and it looks like it's inflation, but the fact of the matter is that the average american worker is doing so badly they're not creating the inflation. it's imported inflation coming from crude oil and oil prices. gold doesn't create inflation. >> maybe we're causing it with our central bank here. >> we're causing it but it's coming from outside. it's not because we're getting paid more and doing great. >> nothing is imported anymore. >> i know. >> i guess, so how do you position -- what are you doing with $3 billion right now? >> you have to play this in the short term. go out the beta curve, trade. >> so do it, don't fight? >> go with the flow. the trick has got to be get relatively close to the edge of the cliff, okay things are good. >> because you're worried about the cliff. >> exactly. i wrote a thing called "fiscal cliffs" i look at china, europe, the u.s., we all look like we have a demand slowdown coming in 2013. >> make another recession call, john. are you making a note? >> don't do that, don't tell people there's going to be a recession. but my arm is twitching. >> doesn't a 1% gdp feel like a recession? >> yes, what we always called stall speed and any twitch can cause the plane to go down. >> is that where we are right now? >> yes. >> we are? >> goldman sachs is really optimistic, they were looking for two but saying all their tracking are running more like 1.5, 1.7. those numbers are terrible. >> you wouldn't say junk bonds, you wouldn't say junk treasuries, or investment grade bonds. you'd say dividend stocks, stocks in general? >> dividend stocks. right now i'd go further out than dividend stocks and take some risks but the problem is how much money have you got, if you're mass mutual or fidelity, somebody really big you can't take your zillions and say i'm going to reverse the boat in five minutes. you can't. if you have 3 billion it's not that much, i'll go out there and when it begins to look bad i'll get out in a hurray. >> you didn't pick a political party. you said we'll screw this up, doesn't matter who. >> they'll screw it up differently. if obama wins, we're going to go over the fiscal cliff because the republicans and obama aren't going to agree, we'll go out there and roll back the bush tax cuts, we're going to do this, have sequestered stuff or whatever and so that's going to hurt. >> how would he triangulate if he wins and they lose some of the house, say the democrats keep the senate, how would he triangulate to work with the other side? you don't think he'd let them go for another year or two? >> eventually he's going to have to, but he's going to get pushed into it and things are going to happen that are going to scare the heck out of us before we get there. >> what if romney, how does he screw it up? >> if romney wins it will look like, the stock market is going to say this is great, go up for a little while and people are going to say wait a second, this is austerity. it's going to look like the uk, look like europe. >> because we're 25% of gdp, he's not going to let us stay there, right? >> exactly. >> you'd see many more cuts if he's in, is that good long-term? >> much better long-term. you could argue that's what we ought to do. what we ought to do is painful, but that's where eventually you have to go. europe is going that way already. japan went that way before. you can't have a part of tokyo real estate selling at price of the whole state of california. >> sam zell said you need to clear the system. sounds like you're not empathetic and sounds cruel but we never really cleared the system in a lot of these markets and you need to clear it before it can come back and he feels i think the same way. >> he was talking about the real estate market. >> right but even housing and i think even letting gm go, clear that system, he meant even let the chips fall where they may in the financial sector. do you remember, the fdic, let it all clear. >> and theoretically if you look back in hitsry, that has to happen and it has happened, it happens by having a depression, it happens by the kings cutting the edge of the gold coins down or killing all the financiers so you don't have any money, that's the old time. >> it's right back then, you still do, walk out on the east river and fall through the ice when occupy wall street takes over. >> we have not had our recession ye recession/depression yet? >> people that were unemployment had pain but not like this. >> what happens if president obama actually -- what happens if romney is elected and decides to go down the austerity program, slashing government spending, puts someone else in charge of the federal reserve and the person decides we need to get a lot the of the programs quickly. >> even if we stopped the programs then the economy looks bad and when i get worried it's late 2013 and we're in a recession, oh, we didn't mean to go here. what are we going to do and i'm wondering do the democrats come back and try inflation again? i would argue that inflation is probably the worst problem because the republicans are going to chicken out. >> and it lasts much longer. john, thanks. we're going to spend more time with you as soon as we can. >> we're going to take a quick break. as we head to that break we'll talk about the rams disrupting the cardinals undefeated season in thursday night football. highlights in this weekend's key matchup are after this and still to come obama surrogate and maryland governor martin o'malley, he was in denver for the debate, heard both candidates take on job creation and the economy. he'll join us at the bottom of the hour. mike rowe here at a ford tell me fiona, who's having a big tire event? 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[ crowd cheering, mouse clicks ] >>> if you have any comments or questions about anything you see here on "squawk" e-mail uus at squawk@cnbc.com. >>> up next, president obama taking heat for his perform absence in the wednesday night presidential debate. nbc's political director chuck todd will join us next. and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. 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[ male announcer ] the endlessly customizable 2013 smart. >>> welcome back to "squawk box," everyone. in our headlines this morning, well, we are just an hour away from september employment reports. the number is the one investors have been waiting for all week. economists are expecting nonfarm payroll gains of 118,000 jobs and unemployment rate of 8.1%, according to a dow jones survey. we have that number coming up and a lot riding on it today. >>> sony is halting u.s. sales of its xperia tablet computer because of a manufacturing defect that could make them susceptible to water damage. it is going to fix the tablets already sold and does not expect a major impact on earnings. >>> dave & busters is putting its public offering on hold. so they're putting it on the back burner. >>> the arizona cardinals headed east to take on the st. louis rams in thursday night's nfl matchup their dreams of going 5-0 came to an abrupt halt. the rams dismannedling the cardinals 17-3, moving them to a 3-3 record, arizona falls 4-1, leaving houston and atlanta as the only unbeatens left in the league. notable games the philadelphia eagles taking on the pittsburgh steelers, one of the best quarterback rivalries returns, peyton manning taking on tom brady in foxborough as the broncos battle the patriots and the nbc sunday night game, the saints and the chargers, despite a bad start for new orleans, a chance for history. drew brees could surpass johnny unias for the most touchdowns in a game, currently stands at 47 games. >>> undefeated and nationally ranked rutgers versus uconn. >> totally shameless, the executive producer. i never have it in the prompter. and the reds are in the playoffs. >> lie, lie, lie, we have done it. that game kicks off at noon tomorrow. >> i hope chuck todd -- the idea that you would be promoing that game versus miami. >> right, we never talk about anything you care about solely. >> it's a husband and wife thing, the executive producer and you both went to -- >> will somebody shut his mike off, please? thank you very much. >> can you read my lips? >>> mitt romney picking up some needed momentum from his performance at the first presidential debate. president obama attempted to turn back some of that criticism by showing, taking a swing back at the gop challenger. listen to this. >> the man on stage last night, he does not want to be held accountable for the real mitt romney decisions and what he's been saying for the last year. governor romney may dance around his decisions but if you want to be president you owe the american people the truth. >> joining us from washington on the debate fallout is nbc's political director and chief white house correspondent chuck todd. you were there. you talked to a the lo of people afterwards. >> i did. >> what is your best guess what happened. this was a surprise to a lot of people watching in terms of president obama's performance. >> what had the biggest impact on me yesterday, i was at the denver rally, i traveled with him back from denver into madison and obviously his base was enthusiastic, being out there to see him, and i interviewed all these folks asking what they thought of the debate and they were dumbfounded, they expressed disappointment, i don't understand, why didn't he fight back, why didn't he do this. that was what was so stunning. these were his supporters, these were people that stood in 45-degree weather in denver, and they were frustrated at the president, and wondering well he had all these lines now. where are they then? >> a day late. >> chuck, when i talk about the ryder cup and i think how could the americans do so bad, but you know what? there was another team, the european team and if you take away -- romney was good, right? it was tough. >> yes, he was prepared, he was good, he was on. >> it wasn't obama being bad. >> he was on his game. it's one you couldn't have just handed a victory. it's not a case where both people did poorly and one did really badly. no, mitt romney was very good. he was crisp. his temperament was right. he had the whole, you know, when he'd hit him on health care he'd say obama care, mr. president, i hope you don't take that personally. he softened it. the whole debate from the get-go, even on the little line about the anniversary, you know. >> that was cute. >> where mitt romney with ann, it fell off the cough. his weakest moment was when he tried a zinger, had the planned line. everything else was unplanned. >> so many times, but not the facts. chuck, when is our next poll, and when will we see -- >> i would tell everybody the first polls to look at would be tuesday/wednesday. >> national polls? >> we're going back into the states, we're going back in florida, ohio and virginia, after that debate we had another plan, i said let's go back in the three most important battleground states and see what's shifted and on any polling, what you want to do is let this settle in, and the first survey, no pollster likes a survey on friday and saturday, it's uneven because there are a lot of people that are watching real football games or some that somehow are watching rutgers and uconn. >> yeah, yeah, exactly. >> hey, chuck wore a red tie in honor of rutgers so there. >> did you even know who rutgers was playing, chuck? did you have any idea? >> should i just say it is a huge weekend in college football. i'm obsessed about mine but you've got florida/lsu, some big games. >> wants points. >> i'm a market guy like you. give me the line, what the market is saying. >> that's what you want. >> come on, it's the market. >> that will make it interesting. i might be watching the giants/reds. that's on saturday night, too. >> i can't stand -- it's a 7:30 time on the wonderful network of nbc. >> any game except for the rutgers game, not insulted. >> ports, ny, channel 624 or -- >> i think it's on satellite radio. here comes the music. ♪ we have the jobs report coming up in less than an hour, a guest on earlier who said we needed to talk to you about what you saw in the last poll in terms of how people feel about the economy because we get these numbers, it's a good read, he was saying there was a serious break between democrats and republicans how they feel about the economy? >> there is. this jobs report and the next one are being totally viewed in political eyes, sort of people reacting so as they've come to their vote, what we've noticed in our polling is they almost answer questions through the prism of their vote so if they're an obama person, the country is headed in the right direction, they're optimistic about this. if they're a romney person the country is headed in the wrong direction, they're not optimistic about the economy. the only number that got out of that bubble where we saw it wasn't just partisan was this idea is the economy in recovery, and that got to 57%. you can't get to 57% if you don't have actually folks that are on one side, you know, bleeding in and believing factually the economy is in recovery and factually the economy is in recovery. the argument now is of course should it be in a better recovery and i think even as you've had the romney campaign saying hey we're in recovery despite, that's been their new mantra. that's the one number that goes beyond the partisan liners. tony is right, on the direction of the country, on optimism on the economy in the next 12 months it is through the prism of their presidential vote that we're seeing people make, express their opinion on that. >> you know, chuck, the big number you've told us, the big demographic is what happens with women. i guess that's going to be a tough question for romney because he just hasn't pulled very well. >> if it's a problem with the gender gap on that front, it's one-sided. he leads by men in single digits and loses women by double digits. it's a combination either he has to improve on women or he's got to expand the male demographic and he has to figure out how to exploit that. to me the measure of whether romney's making progress is going to be in the midwest, the three midwestern states, iowa, wisconsin, ohio, those are the three states where romney's been behind by more than five points in all three states, it's a place where it's the white working class male vote if you will that has been almost even there, that it's been almost a 1:1. it can't be a 1:1. romney's got to win that by big, big margins to offset the gender issue, number one, but to just get over the top there, and that's been the disconnect, you know, the obama campaign's mantra in those three states has been to define romney as out of touch rich guy. did he fix that in the debate and did folks in those three states in particular say okay i'll give this guy a second look. >> 14 points. you knew that? >> are you talking about the gender gap? >> he's talking about the notre dame game. >> 14 points? you're getting 14 points? >> look at you. you don't want it now. >> sucker. >> suddenly getting nervous. this is the market. >> how about 13? >> the opening line was 13. i'll give thaw. >> okay, let's do 13. ohio state plays nebraska. >> it's a great weekend, georgia/south carolina, florida/lsu. ♪ >> undefeated since '66, that was the t-shirts we had, '65 or '66. >> no wonder you're stuck, living in the past when you were like 2 years old in miami. >> chuck is this the more important jobs number or the next one, a few days before people go to the polling booths? >> this one because we'll have had half of the country voted by the next one so this one. we're still only in the single digits percentage wise of people that have actually voted. >> chuck, thank you, see you later. >> tomorrow night, it's going to be great. see you. >>> up next, market musings. what did he do? >> he just -- nevermind. >> oh the miami. >> miami. >> well you're wearing black for the scarlet knights. >> new uniforms, they're wearing all black uniforms, the new deal they cut. ♪ so all black tomorrow. big blackout, everybody is supposed to wear black. >> and did you it here. >> yes. >> we'll be back with more from john taylor. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to tdd#: 1-800-345-2550 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-800-836-8799. >>> check out, at the top of the hour our countdown to the jobs report, investors say it's the most important number before the election. we'll welcome economist joel meyer and mark zandi, and two more former council of economic advisers chairs, the guys that make the theoretical guys, okay, not the policy guys. >> right. >> the theoretical guys that serve presidents, austan goolsbee for obama and ed lazear served under president bush and the other guys more marketing, pr type guys. >> guys who know the numbers and details. >> who was the guy -- all right. >> let's get back to the markets with our guest host, john taylor of fx concepts. for anybody who wasn't watching before you laid out a scenario where you said it doesn't matter who wins because either side politically will mess things up when it comes to the economy and you're going to be looking at a very difficult situation no matter what. that's a little different that what roger altman has written about, wrote an op. ed, no matter who wins they're looking at a brighter side in terms of the economy. >> it's hard to see where the demand is coming from where job growth is so weak and republicans are talking about trying to, you know, bring the government deficit down, trying to straighten out the economy in the long run. so i don't see final demand so things might be better four years from now and therefore the president will look very good in hindsight, but it's going to be a hell of a ride getting there. >> you say might look better four years from now. >> i don't know. are they going to do a good job? it's hard to do a good job. i would argue obama did a good job because the situation was so awful where he started out. looking with hindsight you could have done better than you did. >> what do you think has to happen most? you worry about some of the austerity but you think we need to flush the system and deal with bitter medicine? >> well, one thing, the really good things about the united states, you got to be much more positive about this country than europe or japan. one, because we've got more people here, we're growing, we have babies, we have growing population so the housing problem will disappear. all of the houses are going to get used. i would argue we've already gone through the low in the housing cycle so that's going to be better, so in five, seven years from now we're going to be building a lot more houses which means a lot more workers are going to be building them and you know, whirlpool will be making equipment to go in those houses so things will look good over time but it depends on how the government can manage this. >> no matter who is in you'll not see gdp 25% spent on government spending no matter who gets in, you have to cut it. >> france has 58% spent, i'm not saying that's good but the government could grow to be a lot more than 25, we're only talking about the federal, you're not talking about the states and locals there. we're more in the high 30s. the government could be bigger but we have to tax people in order to have the government bigger. what do you want a smaller government? we have to balance this thing out. >> everything i here is you have to tax more just to pay off our deficit. you have to cut spending and look at the federal reserve running out of things it can continue to do. >> you don't have to pay off the deficit. nobody's ever paid off the deficit or gone -- the policy of paying off the deficit doesn't work. we pay off the deficit because you like clinton, make the economy grow so much, somehow money falls from heaven and the deficit goes away but they certainly didn't start off with a policy i'm going to pay off the deficit. nobody ever said that. >> do you think there's any scenario that someone gets elected, they do some things that make us get back to 3 to 3.5% growth which makes this a whole different picture? >> there must be a scenario. i can't lay it out but there are a lot of things that can happen. in the u.s. the dollar is low and that's a critical input. if you look at where growth has got to come from, it's got to come from consumption, got to come from government spending or investment or exports. nothing else. there's nothing else there. >> the rest of the globe is slowing down. how do you get exports going in. >> the dollar goes down. >> people say the euro is overvalued now. you think the euro is overvalued now. >> yes. >> it helps us if it's overvalued. >> it does help you. >> what would it take to you go long in the euro, have to win the lottery? what would it take? there's no scenario which you'd go long in euro. >> and the euro is not one critter anymore. it ought to be a northern euro and southern euro. the northern euro, god, i'd love to own that but that's germany, holland, finland, places like that. so that's good but the other ones, the euro if you're just looking at the other euro ought to be around 0.8 against the dollar. >> really? we'd never export another anything. >> so where? >> anywhere. >> we export at 0.8 on the euro? >> they're not going to buy anything. they don't have any money. what are you going to buy from southern europe? we all buy clothes from italy, but mostly we don't buy things from people. how many greek things do you see in the store. >> we go there. >> nice place for vacation, the caribbean is nice, too. >> you're right. >> it would be nice and if greece really wants to get out of its problems it ought to get the heck out of the euro and ought to allow people to build hotels. there are no hotels in greece that are chain hotels because they won't allow them. >> unions or something? >> there's a national law whatever. >> that is stupid. you're right. >> that other hotel owners have to allow a new hotel to be built. they're old and they've been there for years. you can't build a hotel there unless you kiss a lot of feet and do a lot of whatever. >> that is wrong. >> john is our guest host today. we'll have more insights from him as we continue, john taylor. >>> joe has stocks to watch ahead of this, the open on wall street and september jobs report. "squawk" will be back after this. >>> do you like "squawk box"? do you like facebook? well, you'll love "squawk box" on facebook. next week, we launch our official facebook page, "like" the show page and get updates, interviews, pictures and more. "squawk box" on facebook, kicks off monday. [ male announcer ] at scottrade, you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... 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>> '04. >> back in '04, i don't know. anyway if you want to listen to this person he says the headwinds faced by the company are likely secular and structural in nature, and further downside, surprises are possible even after it hit a 9.5 year low. >>> coming up, the number that matters most to your money and quite a bit to the election in november, the jobs report for september, will the unemployment rate drop below 8%? will it drop below 7%? keep it here and find out. future as head of the numbers this morning, up 31 points. they've gotten a little better. we'll be right back. ♪ i've never met a girl who made me feel the way that you do ♪ ♪ you're all right ♪ whenever i'm asked to make my dream, i tell them you do ♪ ♪ you're out of sight >>> i've been living out of hotels to are a month. >> welcome back to "squawk box." i'm becky quick along with joe kernen. andrew ross sorkin is off today. >> hey, beck. >> our guest host is squawk market master john taylor, chairman of fx concepts. if i don't say that i knew that i wasn't becky quick, like "the new york post" will say -- >> you're aquaman. >> i saw it, i read it on purpose. we've been counting up and down in 8:30 eastern and september employment report, you are looking at a live shot of the official labor department clock, 8: 8:01.32, matches the one we're looking at. >> ours is a second faster. they don't let anybody talk there until their clock says so it doesn't matter what our clock says. >> economists is you are veighed by dow jones expect the unemployment to hold steady at.1, looking for jobs, non-farm payrolls up 118, and then seen some others above that, some down to 110, 111, mark zandi and michelle meyer will join us with more on what to expect from the report and after that an economist battle royale, it says here, austan goolsbee and ed lazear will go head to head. austan goolsbee was head of president obama's economic advisers and ed lazear former economic adviser to president jor george w. bush. >>> morgan stanley is planning to cut more jobs and slash bonuseses. james gorman tells "the financial times" those are the sacrifices necessary to boost profits and shareholder value. he's sympathetic to the view that this industry is still overpaid. >>> samsung is reporting quarterly profit a record $7.3 billion, nearly double last year's figure. analysts expect the current quarter to be difficult as samsung spends more on marketing as it escalates its fight with apple. >>> and dozens of lawsuits have been filed against facebook, the nasdaq and various ipo underwriters and they're going to be centralized today before a federal judge in new york. facebook requested the transfer. investors argue they lost money due to nasdaq technical glitches, they accused facebook of selectively disclosing on flattering information about its business prospects to analysts who shared that privilege with certain select investors. let's get a check on markets this morning, u.s. equity futures have improved, this is a more exciting not ominous thing we're looking up here, up about 30 points, 29.64, overseas in asia, we saw a lot of green with ross and more green in asia, although in india that's not the case. european equities this morning are good, up about anywhere between 0.5 and 1 percentage point. >> the job report is important for the markets and also for the election. we've been trying to figure out what it would mean if it's higher than, lower than the numbers that are expected coming in. chuck todd poents out that this is probably the most important number, even though we get another number that comes just days before people head to the election booths. he says that by that point a lot of people will have already taken in with the early voting so this is going to be the last number. >> early voters would look at this number. >> in fact some of them, october 2nd is when it really started. i was surprised, half of the people already voting? in any event this number is probably going to be the most important number as we head into the election, so this is the day. wall street is watching, main street is watching. >> i wonder if that would hold true for the debates, too. >> that this was the most important? >> right, because the people will have voted by the time we see the next one is two weeks. >> right. there's a vice presidential one next week on thursday, the next presidential one is two weeks. >> i don't know if people vote based on vice presidents though. >> you might argue people did last time around. >> right, well this time the democratic version of -- anyway. >>> more and more states obviously have been facing the challenge of trying to raise revenue while keeping jobs from moving out of the state. joining us is democratic governor martin o'malley, supporter of president obama and governor thank you for joining us today. ♪ thomas o'malley, o'malley >> have you seen "the aristocats,"? >> yes. no relation but my father's name was thomas o'malley. >> he must have gotten that all the time, the late great phil harris, "aristocats" great movie. >> he got it all the time from six kids singing it at him. >> i knew that. thanks for playing along. >> governor, we're watching this jobs number coming up today and this is something as the head of a state you play close attention to. >> absolutely. >> what's your sense of where we stand as a nation in terms of the jobs picture? >> we are fighting back from the worst job losses that we've seen since the great depression. the good news is for 30 months in a row our nation's been creating more jobs every month than we've been losing, and most of that job growth, the vast majority of it has been in the private sector, so we are clearly moving forward. we could be moving forward a lot more quickly, and i think we will, after this election, and a better congress. i think there was a political calculation when the republicans tea party congress took power that if they could slow the job growth before the election, they could hurt the president's re-election. >> you think there's people who want fewer jobs just for political gain? >> i do. if you look at the several jobs bills that the president has sent to the hill, republican party voted absolutely against him. when i say absolutely i mean every single time they came up, each and every member of their party voted against the jobs bill. when fdr brought us back from the job losses of the great depression, it was not by one act. it was job initiative after job initiative and that's what we need to continue to do as a country. what we've actually seen and the numbers will bear this out is while the private sector has been coming back with greater job growth, we've seen the public sector actually dragging that rate of job growth down. so we need a balanced approach. we need to make sure we're not eliminating public sector jobs at the same time we're creating them in the private sector. last year our state ranked ninth in terms of rate of job growth but we want all of the states doing better and you can't do that if you're eliminating as many public sector jobs as we create in the private sector. >> as a governor you have a tougher job a lot of people argue than people in federal government because you have to face this idea of balancing a budget and making sure you are bringing in revenue to pay for everything that you are spending. you've tried a couple of different things, a tax on million narz that expired at the end of last year or this year. now ir'switching tack and raises taxes on anybody who makes anything over $100,000. >> i'm not sure -- well let me say this. we have in fact the third lowest rate, i mean third lowest state and local tax burden of any of the 50 states in america as a percentage of income. we have the highest median income in the country and so we believe in a balanced approach. we have a aaa bond rating and we did put in place, i wouldn't call it a tax on millionaires as much as i refer to it as a progressive income tax and in our state those who make more pay a slightly higher rate than lower earners pay, but we have a rate of job creation that is better than most states. we have in our science and technology sector, very strong sector growing, life science, biotech, i.t., professional services, health care with johns hopkins and others. >> governor? >> yes, sir. >> we had already, when the president proposed the american jobs act, we had already been over letting the bush tax cuts expire just for the rich, and keeping them for people less than 250. we had already had that argument three or four times and it was clear from the composition of congress at the time that the president put forth the american jobs act that there was no way that was going to happen. so letting it, where that was going to be a provision in the american jobs act was pure political posturing and in no way, he knew there was no way that that was going to pass. i just take issue with you saying that this was all republicans saying that they weren't going to, they were going to make sure the jobless rate was much higher. he knew full well that he could back them into the obstructionist corner by saying that we're definitely going to do that, making that part of the american jobs act, right? >> well, wait a minute. >> he did it. that's the way he did it. >> no, no, excuse me, who backed who into the obstructionist jobs corner? >> you think there was a chance that the republicans in the house were going to go along with that, letting the bush tax cuts expire on the rich but not on -- did you think they were going to go along with that? >> yes. it's called appealing to the common good and if, as you have concluded that they will never go along with a jobs initiative -- >> after 2010 they weren't going to, after that election they weren't going to. maybe after 2012 but not the composition of congress we had at the time. he knew full well it wasn't going to work and the jobs bill languished. i would have left that out. >> what would you expect a good president to do, stop trying? >> not stop trying but i would have structured a bill he could have worked with the other side to get through. >> there is no bill like that because they're trying to slow the economy before the election. >> might have helped with health care to work with the other side a little, too. >> hey, if the president has, the president has shown his willingness to compromise sometimes to much greater degrees than some would deem is proven but you can't stop trying. he put up five different jobs bills. each one of those jobs bills not wanting to add to the deficit, he said you know what? we should have millionaires return to the same fair rates they were paying under president clinton. >> i think it's still possible some on the other side are voting principle in terms of not going along with certain provisions. >> oh, come on. >> they wanted to make sure there were more people were out of work, every one of them. >> they want to slow the economy before the election and if you don't believe that -- >> that was a year and a half ago. >> i have a bridge i want to sell you in brooklyn. that is what the republican obstructionists in congress have been about. >> some would say they were spawned in 2010 by the way health care was handled, you almost created the tea party. >> you can create excuses for these guys if you want to, but the fact of the matter is, every single jobs bill the republicans in congress have voted against. do you want to create -- >> they passed one. >> name it. i forgot which one. >> the one with the payroll tax extension. the unemployment claim extens n extension. >> well, that's one and you no what he? if they were batting in the major leagues they'd be off the team right quick. we need to put job creation first. >> we all agree with that. we don't want to talk about the pipeline or the nlrb then, that's for sure. >> we can talk about any number of things including the fact that domestic energy production is way up under president obama. >> we heard about that in the debate in spite of instead of because of. >> not in spite of. the fact of the matter is president obama has reduced our dependence on foreign oil over these last few years, we've seen jobs created in the solar industry, in green industries. our state ranks fourth among the 50 states in terms of the number of jobs in the green sector so there are things we can and must do in order to make this recovery happen more quickly. but the fact of the matter is, not since 2005 have we had 30 months in a row of private sector job growth. we're seeing our housing industry coming back, with housing values rising in maryland, seven consecutive months on a year over year basis. so there are a lot of things we can do as a country, if we put job creation first, and that's what president obama has been doing, even in the face of obstructionists who are trying to slow the jobs recovery before the election. >> governor? >> that dog is trying its best to catch up with the fire truck but we keep moving forward. >> governor, i want to thank you very much for your time today. >> thank you. >> governor o'malley again from maryland. >>> coming up, we are counting up -- counting down to 8:30 a.m., september employment report, our jobs panel members are making their way to the "squawk" set, mark zandi, moody's analytics and michelle meyer of b of a merrill lynch global research. we'll get their predictions, next. >>> welcome back, everybody. it's jobs friday and we are a few minutes away from the release of the september jobs report. joining us is michelle meyers, and mark zandi. and of course john taylor is our guest host from fx concepts. mark, why don't you give us your number, what you're expecting. >> a expect a gain of about 110,000. >> right in line with consensus. >> yes. >> and employment number? >> it is a little low. i'm a slave of the data, joe, the data says one thing, i go with it. >> you're always more optimistic. >> filly fed, the jobs component there? >> the ism surveys have all been negative, we have our own business confidence survey. >> you even try to do participate rate and unemployment rates? >> to predict them in. >> yes. >> i predict everything. >> you're fearless. >> the decline last month was very weird so i think we'll go back up to 8.2%, so that's a job market that's improving but very slowly for me. one other quick point before you go to michelle, i don't want to hog too much time but we did get employment revisions, joe, big ones. >> you mean for the year? the 400,000 in. >> yeah, 400,000. >> so the numbers you've been talking about, 150 to 2. >> that's closer to reality. >> how frustrating people don't pay a whole lot of attention. it's the real number but -- >> came out to 20,000 a month. >> that's a big difference. if i told you 130 or 150, you know. right. >> michelle, how about you? >> we're a little bit more pessimistic, 90,000 for job growth and think the unemployment rate will increase to 8.2% also. we've had a bullish consensus call, the economy is on a slow footing, we're worried about the uncertainty shock as a result of the fiscal cliff and i think if you look more broadly at businesses right now, you're certainly seeing a contraction in investment, and a hit to confidence. you see it in capex and durable goods orders. the request he is how that ends up translating to labor if business also cut back on labor as much as they cut back on capital and we think we won't see an outright contraction in jobs but certainly see some slow job growth. >> john, you're nodding your head. you agree with what michelle was just saying? >> kcapex and things like that don't look good. >> the shortfall in jobs is the hiring. if you look at -- >> hiring slowed down. >> it's not layoffs, it's the hiring. if you look at the hiring rates across industry, first thing that comes that's obvious is across all industries so that would be consistent with michelle's view the uncertainty that's pervading across the economy but the other thing you notice is a lot of it is construction, housing, and so when that comes back. >> there's a lag between investment and housing, and actual construction jobs so housing investment and construction is termed but there's still spare capacity in the employment and construction employment which is why you're not seeing hiring yet, you're just seeing the current workers working more hours. >> michelle, mark and john are going to be with us as they wait for the number, they'll help us break it down in a moment. >> what's coming up? ♪ i had no idea. >>> a possible merger of well-known tv franchises, we're going to bring you that story next. i'm trying to, looks like "american idol." >>> the wait is almost over, the actual number, it's not an atomic clock. 8:21.07, so we got about eight minutes and change, our panel will break down the data. who is doing it for us today? hampton? >> i think so. >> we'll have an economic showdown, a person that looks like mark zandi but less hair, austan goolsbee, and ed lazear will debate the political impact of the jobs numbers, all just a few minutes away, better looking. [ male announcer ] for the saver, and a big first step. for the spender who needs a little help saving. for adding "& sons." for the dreamer, planning an early escape. for the mother of the bride. for whoever you are, for whatever you're trying to achieve, pnc has technology, guidance, and over 150 years of experience to help you get there. ♪ welcome back to "squawk box" everyone. two well-known reality television franchises may be coming together. apollo global management, the parent of "american idol" and owner corps media group wants to merge with the producer of "big brother" as well as "deal or no deal." apollo owns one-third of endomol. when we come back the september report a few minutes away, final predictions from our panel of experts and bring you the numbers and the market reaction, right now as we head to a break, take a look at the u.s. equity futures, they've been higher all morning long, up by 25 points, up by almost 2.5 for the s&p futures. look...is only the beginning. ♪ ♪ introducing a stunning work of technology. ♪ introducing the entirely new lexus es. and the first ever es hybrid. this is the pursuit of perfection. ♪ >>> welcome back to "squawk box," we're a few minutes away from the september employment report. let's get to some final predictions from our panel of experts, mark zandi, michelle meyer, john taylor, steve liesman, rick santelli. john, you said no matter what happens the market goes up even if it's a disappointing number. >> yes. >> why is that? >> if it's a disappointing number romney wins the election. >> you think it's a knee-jerk reaction. rick, we have not heard from you this morning. what are you thinking and feeling down there? what's the mood? because we've heard from a lot of people this is the most important number before the election. >> i don't think it is. i think that makes the general public look silly. one number isn't going to change the election. i think it will continue -- >> chuck todd told us half the people have already voted. >> well i'm going 79,000 and 7.9, if anybody's interested. >> oh, wow. >> interesting. >> 79 is wild. >> rick, my number was the participation rate goals to 42% and the unemployment rate comes in at 5.9. >> oh, come on, joe, i would say bring it down to about 39% and get it down to 3%. yeah, i agree. i wonder if there's a room where people are scratching of their head trying to do that utility function. >> steve, do you have a number you're looking? >> do i have a number? >> yeah. >> i do. >> which is? >> you do your work. >> i'm right in at 140 which is the exact average of the past, it's the year-to-date average and it's not a bold prediction. i think it feels like a 140 economy, and if it comes in below that or above that, i'm not going to be persuaded that the number is actually above or below, and one quick thing, i don't think you can tell people what the jobs situation is in their lives. they know. >> they know it themselves. >> i'll have data on the back side of this. >> we are a few seconds away from the september employment report. this is the number we've been waiting for. hampt hampt hampton pearson is up. >> up by 114,000 jobs, 7.8 % is the new unemployment rate. september jobs the consensus forecast the number is right in line but the downward decline of 0.3% in the unemployment rate a big surprise, private sector jobs increased by 140,004,000. significant revisions to the july and august report, the combined increase is now 86,000 for those two months over what had been previously reported as far as job growth. back to how did we get to 7.8% unemployment? total employment from the household survey increased by 873,000 jobs last month, the highest one-month jump since june of 1983. job gains overall, health care, plus 44,000, transportation up 17,000, financial services up 13,000, the biggest decline last month manufacturing down by 16,000. the number of unemployed persons declined by 456,000 to 12.1 million, those out of work six months or longer 4.8 million or about 40.1%. back to you. >> hampton, thank you. the headline has to be 7.8% for the unemployment rate. >> now below when president obama took office. >> yeah. >> it didn't go back to where it was. it started at 7.9, 44 months above eight -- >> why was he so unprepared for the debate. you'd think they'd spend more time preparing for the debate than massaging the job numbers. can i give you content on how that happened? can we say wtf on tv? is that okay? this is an amazing thing. here's what happened, just the background on this is the household survey has been lagging for a while, mark, it's been curious. >> down. >> this is the volatile, there's two surveys out there, the one where they call 50,000 people up and do it by phone and the establishment survey where they get reports of jobs. this is from the phone survey, so it's very volatile, okay? workforce went up by 418,000 so the participation, okay, the employed went up by -- >> say that again? >> workforce rose by 418 so i don't have the participation rate in front of me, it had to have risen. >> rick, we're going to find out -- >> let me get the data first and then you can spin it. >> why did the bad debate performance mean they help the numbers. >> if they were so good at what they did they would prepare the numbers. >> i'm not saying one word. i'm not saying a word. >> you're saying -- >> that's a great sargment steve. >> i told you they'd get it under 8%. they did. let america decide. >> can i just give the data and we can talk about the conspiracy. the number of employed in the household survey went up by 873,000. it's got to be the biggest month ever. >> what is the participation rate? >> i'll get you that, rick, can i just give the top line stuff. >> oh, yeah. give the fudge before you give the brownie. >> the number of unemployed fell by 450,000. the u6, rick, unchanged at 14.7%. i'm not sure why that is but you did have a 200,000 or so drop in the number of unemployed for 27 weeks or more. now take it away. i just wanted to tell you how we had -- >> all the numbers ever pretty good, they revised up august. >> i got my 140 out of it, i have to calculate it. >> and up 0.3% hourly earnings. >> yes, hourly earnings. >> it would have to be a grand conspiracy earnings. >> because the household number was so funneled? >> so fudged? >> some of the things i was looking up before you could see a different number this time around because of the seasonal effect of hiring for holiday workers and things, is that part of any of this? >> the numbers are volatile and we've had big revisions, we've had seasonality issues but overall, taking into account the many different components this was a good report. the unemployment rate fell for good reasons because there were actually more jobs added. >> right. >> household survey is volatile of course but i would say on balance it's a positive. >> in my mind's eye we've created 4.7, maybe 4.8 million jobs with the revisions since job growth resumed two and a half years ago so that's well over half the jobs lost that we lost during the recession, and private sector jobs, we probably must be well over 5 million, must be close to 5.25, 5.3 million. in the grand historical scheme of things that's not too bad. >> here is something you can chew on a little bit, mark, the last three months, three months, september, august -- july, september and august they revised government employment to a positive. it was a negative in the first, in july, a negative in the first print in august and positive this month, so we've done 18, 45 and 10. hmm. so it looks like they've kind of gotten maybe to the end of the cycle here and they're revising what's happened. >> what did you just say? say that again. i'm trying to keep up. they've revised the last three numbers? >> they revised the government employment. >> for the last for july, august, september. >> it was negative in the prior two months, now it's printing positive. >> oh, government jobs, not private sector jobs. >> also printed positive in september, so that's, i guess an easy way to kind of perpetrate this conspiracy is you would then go and add government workers. >> rick, why did, i mean you said 7.9, so you miscalculated. didn't you think it would be better to be below the rate where he actually started than, why would you say 7.9, why didn't you go to 7.8? >> i think the rate has to be under 8% in my opinion. >> so under 8 but this is better because now it's actually come down over the last year. >> i try to be objective. the job creation on the headline at 114,000 does auger a higher, there was a higher labor force participation. >> 63.6, went up. >> that's real. the household survey and all of that, i know we can bait and switch and i know everybody at that table has no ideological lean at all, but in the end, it's apples and oranges. >> just like you, rick. >> household establishment, household establishment, you know what? all's i know is that i'm not that good to call it last month to be under 8%. >> let's be clear, mark, does all this huge pop in the household survey bring it in line with the unemployment survey, with the payroll? >> it's higher. >> it's higher now. >> over the past year the payroll survey not including these numbers is about 150k per month. the household survey was 200k per month but what's key here is that the household survey tends to lead the payroll survey coming out of recession into recovery so this augers well for the future. >> john, how does this play into your scenario, worry being slow growth, worried about what's around the corner, worried whoever wins in november inherits? >> one of the problems, this is a lagging indicator for everything, employment, so therefore -- >> it's a coincident measure, not a lagging indicator. >> i'll give you that, but it doesn't tell me anything about the future so i'm more worried about what the government is going to do in the fiscal cliff and those kinds of things than i am and i'm also worried if romney wins the election he's going to slow things down, and i think that's bad. >> obama or romney? >> romney. >> romney is going to slow things down. can i add to what you said, john, is it also true the on sense of job growth could make you pessimistic about the future in that you don't have the support for the recovery you would expect? i agree higher job growth is not necessarily an omen of better economic growth but in the absence, mark and michelle also, this is what? let answer not get excited. it's 114 on the payroll and say it's revised up next month, revisions hold to 150. it's still a 1.5, 2% economy. we're not making huge inroads here. >> it's still a challenging environment and i think what's encourage something we're making slow progress but by no means are we accelerating to a much different business cycle. the fundamental challenges that the economy faces are still there. you still have the fiscal cliff at the end of the year which is going to be a concern. you still have credit conditions that haven't returned to a normal environment. you still have concern over the synchronized global slowdown so steve, i think it's important to put the number into perspective but at the same time, it is showing a bit better news than we would have thought. >> here's a perspective. you can look it up and down and all around but cutting through the data, we're at least 150k per month which is not too bad and i'm not sure gdp is right. this would not be consistent. >> if you showed me 2.5 or 3% growth i'd be excited doing 250s and 300s, that's high, but doing 200s on jobs. we're not doing the growth so i don't expect the jobs. >> the official gdp number is 3.5 to 2 or somewhere in between there. this doesn't feel like a 1.5 to 2% economy. i say it's 2, 2.5, maybe higher. >> depends on productivity, too, that's what's caused this differential between the job numbers and gdp that you had -- >> the current gap between jobs and gdp suggests essentially very little productivity, which would be unusual that it would be this weak. >> what are your tracking numbers showing for the economy, if you don't trust the gdp numbers you got to have your own system or whatever that's kind of -- >> i track the gdp numbers and it's tracking in the just ended q3 at 1.9. >> that's q2, you know, that's what i see all around is it's under 2. >> i'm going to be when i come back at 10:00 i'll be looking at the difference between the house hold and employment surveys and where they are and what they're telling us about the future. >> what did hours worked do? >> give me a second, i need to get there, hours worked average weekly hours up a tenth. >> that's a lot. this is a really big report. this is a big report. >> guys, thank you all very much, steve, see you back in a little bit, rick, see you in a little bit. michelle and mark thank you for coming in. john will be with us for the rest of the show. >>> come up next the political implications of the jobs report, guys who use advise presidents, austan goolsbee chairman of the council of economic advisers under president obama and ed lazear chair under president george w. bush. ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it. whatever your business challenge, chances are, you're not made of money, so don't overpay for motorcycle insurance. geico, see how much you could save. >>> let's get more reaction to the numbers, joining us two former chairmen of the white house council of economic advisers, ed lazear advised president george w. bush and austan goolsbee, former adviser to president barack obama. you know, our friend liesman, austan, he said if they could fix these numbers, if they could somehow fix them, then why didn't they fix the debate performance? that didn't make sense to me. i think i figured it out. you could relax at the debate if you knew you were doing 7.8, all right? you could kind of mail it in, like hey, no big deal. i'm getting a 7.8 on friday. >> look, first of all, i've been saying for months, you've made me be mr. pessimistic on the jobs panel month after month and i told you finally the seasonal adjustment would kick in, in our favor, starting in september and then you didn't have me on! i would have predicted this. you got to at least -- >> i didn't know i could make you do things. that's cool, what do i want to you do. >> no, you made me do nothing. you kicked me off of there. >> where were you last month? >> it wasn't for lack of asking, was it? >> i'm sure we probably begged. >> no, i'm just playing with you. you got to learn the name of the bls commissioner before you can accuse anybody of conspiracy, we established that. >> eddie lazear, ed never, you know, we try to get him to be partisan, he's too nice. tell us what about these numbers, though, everybody looked at the real details of the report and said this is a really good report even though it's still at 114 or whatever but there are some revisions i guess. >> i'll say the same thing that i always said when i was at the white house, and actually i always heard austan say as well which is you want to look at a more general series of numbers rather than just one month and actually this one month is nothing to write home about, 114,000 isn't even treading water so it's all right, and it seems consistent with what we've seen. remember the household numbers were down and down pretty dramatically over the past couple of months so this tends to make up for it. my view is that we're pretty much kind of where we've been. the average is about 125,000, 140,000, something like that, so we're about read treading water. the labor market hasn't looked up. i'm kind of a wonk on this, i like these joltz numbers but i look at the monthly hires, the best way to get a sense of whether the economy is growing and if you look back four years ago, we were hiring 4.2 million a month. today we're hiring 4.2 million a month so that number has got to grow before we're going to see the labor market turn around. you know, we did have a little bit of a wind at our backs at the beginning of the year, had about 250,000 per month and looked like things were going to pick up and unfortunately that wasn't sustained. >> austan, i misunderstood, you were asking about john galvin at the bls? >> now all of a sudden you're the expert on bls. >> i loved him on "psycho"no, john gavin, a different guy. >> a different guy. you want to take multiple months an average, far accurate than any one month. if you look at the last few months it's been okay. we should take some heart in that the numbers are improving but they're not improving fast enough. they need to be a lot better. if you look around the world, i think one of the things to note is, we're not growing that fast, and we're one of the fastest growing of all the advanced countries. this is a pretty tough spot that the entire advanced economic world is in especially in europe, and so that's just a big wait that we're trying to get off. we're making slow progress but it's got to be faster. >> explain -- >> i would agree. >> go ahead. >> i'm sorry, i was going to say i agree with austan on that. people talk about is this a problem in the labor market, is this a jobless recovery? that's not what's going on. if you look at our growth rate since the end of the recession we've had about 6.5% growth since that time, and the job growth is almost right on where we should be, given the historical numbers. we've had about 3% job growth, 6% economic growth, so the problem is not that the labor market is out of whack. the pain is felt in the labor market but i think austan's right. the problem is that we are not growing. the world is not growing very rapidly and until we get the economy growing, we're not going to see a lot of improvement in the labor market. >> john? >> absolutely. the problem is that the rest of the world is doing poorly and how can we grow? consumption is going along with the job growth, export market is deteriorating now because europe is deteriorating. >> wow. i listen to all of this and again i feel sorry for ben bernanke because it's all on his shoulders still or at least he thinks it still is. austan, or ed, we never talked about you to the latest move in wre thr qe3. thumbs up or thumbs down. i know that's going to happen. >> jump ball. >> a is before e. all right, austan, quickly, what do you think? >> look, i think he's doing what he should be doing, but the effectiveness of qe3 is going to be less than 2 and less than 1 and less than a twist. >> we're going to lose your window. ed, you like it or not? >> i second what austan said. i think that it's just not a particularly powerful policy at this point. >> all right, great, gentlemen, thank you, we're losing your window. this is tv talk, a satellite thing. thanks, guys. >>> when we come back we have the street's reaction to the jobs number, we will check in with jim cramer at the n xwrrys. >>> and avon is up on the news andrea jung will be stepping down from the board at the end of the year, she was replaced as ceo in april. fred hassan will be avon's nonexecutive chairman. >>> monday, facebook and "squawk box" collide. keep in touch with joe, becky and >>> welcome back to "squawk box." let's get down to the new york stock exchange. jim kramer and david faber join us now. faber, you and cramer, we had this facebook/squawk box, have you looked at that, cramer or faber. >> >> i saw some yesterday on it. they're putting up a bunch of taped of squawk shows and this was us in philadelphia and first we interviewed the guy with the street.com shirt. i said what is this? "the stack" and and then they interviewed some guy in the crowd and they said his last name's cramer and it was your dad. i mean, you had more plants. >> october 3, 1998, my father was on squawk next to the liberty bell. >> yea. >> this was before you were an icon with "mad money," but you were working it then. you had people in the audience. >> 1898. >> the federal reserve called -- five days later the federal reserve called an emergency meeting and cut rates after october 3rd when he said he was going to raise rates. >> ltcm. >> you have an incredible memory. >> yes, we were. >> people seemed to think we would see a similar move before this year ends. i don't know if that's true. >> i had a head of hair that would blow your mind. >> if anyone else wants to see that that will be on squawk. >> nemo's not helping facebook. >> that's amazing. what game are not -- >> how does that work? they get charged on half of the acquisitions. people stopped playing on gpop. i know i am. i was playing with everybody and that was the end. >> i don't know what gpop is. >> and they're not helping the employment number. zynga. >> how was larue, texas? >> it was beautiful. >> you ever been to a flyover state before? have you ever touched down and gotten off the plane? >> i've been in texas every year for the last three years. we shoot guns and blow stuff up. there are things exploding all of the time. they blew up a bomb that shook the house so much that one of the deer heads fell and almost killed one of the guests. >> all right. >> there's a good texas story. >> it's texas. >> guns and religion. thanks, guys. we'll see you in a couple of minutes. >> when we come back we'll have more from the guest host, squawk market taylor, jack welch tweeted that maybe this number's been played with. >> those chicago guys will do anything. >> by the way, don't miss "squawk box" on monday and we'll be talking with carly fiorina former chairman and ceo of hp. >>> final thoughts from our guest host john taylor of fs concepts. we were just talking about this tweet from jack welch. he tweeted, unbelievable numbers. the chicago guys will do everything. can't debate the numbers. it is lighting up the tweet sphere. >> there was a huge 873,000 increase in the household survey exceeding the 418 in the labor force. a lot of these numbers, is there wiggle room? there's assumptions, right? >> there's a lot of wiggle room. they're calling up people on the phone. who knows who answers the phone? nowadays you have cell phones and you're not going to answer the phone at home. my phone won't be answered because you'll say that's some weird person polling me. >> although some would say how come it goes and not above. that is volatile. >> because of that, don't trust the number like that. steve had the right answer. he was averaging on ten months and now it was his forecast that was easy. >> and to be honest with you, if i was going to manipulate them
CNBC
Oct 8, 2012 6:00am EDT
it is columbus day and many schools and businesses are closed across the country. no bond rating today, but the equity markets are open. the futures by the way are slightly lower. dow futures down by about 52 points. s&p 500 futures off by about close to 5 1/2. a lot of some of the concerns around the globe. we'll talk about the bulls and bears coming up with jeff rosenburg. he's black rock's chief investment strategist for fixed income. also equity strategist at miller taback. also carly fiorina will talk about the fresh money coming in for the romney campaign. all that plus states and cities turning to gambling to make up budget shortfalls. we'll bring you a new casino opening up in the battleground state of ohio. first let's get you up to speed on the other top stories. andrew, welcome back. >> good morning. it was decision 2012 in venezuela this weekend. hugo chavez has been reelected. he beat out by a 54-45 margin. in 2006, he won by 27 points. swreker to gives chavez a fresh endorsement of his socialist asian world bank saying brace for slower growth. lowest pace of growth since 2001. and that's predominantly due to the region's exposure to china. and finally, a u.s. congressional committee set to recommend blocking china's big telecom equipment maker from expanding in american markets. leaked report says that there are security risks. >> codo we trust the chinese? >> if you were looking there, i would find another vendor if you care about your indiatakellectu property and the national security of the united states of america. >> that report was something. the full report set to to be released at 10:00 a.m. eastern today. the move comes as they're considering a public offering. and joe has more headlines. >> the leaves are changing color. east coast starting to feel the chill of autumn. that could only mean earnings season are upon us. i'm not sure why my headlines aren't exciting enough or ominous enough for the new music, but apparently they're not even though earnings are not expected to be that great. so you would think maybe i would have some music with my read here. there it goes. >> i'm even getting sick of it at that point, sorry. >> it's not going to be a good earnings season and i don't get the music. alcoa will report -- these earnings are up in the air. alcoa earnings coming after the close tomorrow. predicting s&p 500 results will cr drop 2.6%. that would snap 11 straight quarters of gain, hence the worry, the tension, the anxiety of the companies that have issued guidance 78 have warned. but it may not be all that bleak. always seems to be better than people think. on average 72% of companies have beaten analysts over the past four years. so 72%, they know how to do this. governor jerry browns has ordered state plugs regulators to let gas stations start selling winter blend fuel. that will help ease hopefully record high gasoline prices. regular price hit $4.66 a balance and topping $5 in some area hes. winter blend gas is cheaper to make than summer grade. processed to produce less smog. great thing about california, most of the time you're not moving. you're just sitting there at $5 a gallon. >> the lundberg survey says national prices rose less than half a cent over the past two weeks. you didn't play the music if it's less than half a percent. that's less foreboding. it was $3.83 a gallon -- you don't want to make fun of the music p about. >> the viewers wrote in and decided they didn't like it. >> many regions outside of california seen a decline in prices. >> i like that there's some music. >> i think it may be too loud and a little too ominous. >> nothing will spoil on your parade. >> rutgers 5-0. >> how about that notre dame game. no idea. no idea. >> i know about the giants. >> that was a good situation. yankees won. >> giants i care about did not win. they got their ass kicked twice. >> your reds, though, won. >> that's what i just said. the giants i care about got their ass kicked twice. and then maybe one more time -- it will happen in cincinnati hopefully on tuesday. that's a game i can watch p. >> if they get there, will you go? >> to the world series? i guess it would depend on -- probably not. who are they playing? >> giants right now. but you're saying in the world -- >> i hope it's the yankees. >> if it was in new york, then you would have a shot. >> that would be on exciting. be like all the way back to 76 or 77, 76, i think. >> you're probably jet lagged, aren't you? when did you get back? >> friday. 24 hours. i missed everything. jobs. the debates. i did see the debates and i saw -- i watched everybody here from paris doing the jobs number. >> missed a you new kind of greek cookie. but you heard, becky is right, beware of greeks bearing gifts. she brought a bunch of stuff in here and lulled us into -- >> fatten you up very quickly. >> like a pound of butter in every piece. you could use a little. you look thin. >> i was eating out of control actually. >> the true 1%er can pronounce crossiant. >> but nothing else. >> 54-45, they're the same number, aren't they? >> on chavez. it's an issue. >> let's get a check on the markets. we are looking at some red arrows. story in the financial times talking about there is a global recession out there. u.s. may be defying that, but they're seeing a lot of negative signs around the globe. world bank sharply down grading expectations for growth in china. european markets are lower. there are new concerns about greece, about spain, a and that will take front and center stage this week. merkel is headed to greece. and next week a big meeting of many of the eu ministers. so you'll see a lot of concerns about what's been happening there. shanghai back open again, it's closed down by half a percentage point. in japan, the nikkei closed up by about 0.4%. and in core rearc the kospi higher, as well. part of this is because of the world bank and what it's saying about china. take a look at the dollar. it's up against the euro. also up against the swiss franc. the thought is the u.s. is withstanding the global recession that could be on the move around many parts of the world. it take a look at gold rises. they've down sharply. >> would he feature football game and the fight song, did notre dame. >> you're right. on friday. >> 41-3. >> chuck todd, we have to get him back on. >> he called in sick today. we didn't bet anything. >> yoe bjoe bet chuck todd and him 13 points. >> first couple of sequences that miami had, two just the guy dropped the ball. it hit him in the hands. >> can chuck call in? >> yeah, time for the global markets report. and i was thinking about this. we have probably 20 college games on now because of we got all these different sfags stati cable. all the pro teams are in full swing, all the nfl. and we've got all these playoff games going on. and i think about the sports that you have over there. is there anything to do on the weekend except stand around in the rain? >> you may have heard of the premier league, the most widely watched football league in the world. i don't know. >> let me ask you, how many games were there this weekend and did anyone score a single goal or was it 0-0? >> in the entire football league, there were probably -- >> three goals? on penalty kicks that they finally had to do it because no one else had scored. >> 100 teams in the premier league and all the others and we score some had goals. >> at least three. >> there was a lot of rugby going on. and some golf, as well. >> look behind you and you're trying to export that to us today, too. look at that. what went on? everybody's in a bad mood over there? >> it's take matt tig. dramatic. >> he wants the music. this is even more dramatic. i'm more anxious than becky's stuff. >> weighted to the town siuwn d side. most of the stocks are under water, but we had some good gains last week.most of the sto water, but we had some good gains last week. ftse down about three quarters of a percent. so the the graphic representation is not as bad as it is. xetra dax down about 1.3. there is some stock new that's worth looking at temperature more breaking news on the proposed bae/eads merger. you didn't push the button. we have the major shareholder invesco coming out, 13% stake, saying we don't like it, we're going to vote against it, we think it will damage the u.s. interests in bae and affect the liquidity. split shareholders. it will also impair heavily on the commercial products in the united states. they didn't like the going for growth. so just another fly in the ointment for the proposed merger. and finally, george osbourne spoke to us today, as well, about how he views the continuing ability of britain to deal with the situation. quick listen on that. >> one of the countries getting on top of our debt problems. we have a credible plan to reduce our budget deficit, that's delivering very low interest rates for us in the markets at the moment. so that is the proof that there's international confidence in our plan. >> gilt yields are slightly lower. we're waiting for spain of course to ask for a bailout. spanish yields are lower. and if they stay in those sort of levels, spain will ride their luck for as long as they can. back to you. >> i was with you on that, ross. your audio guy was sleeping there for a second. we were going to step in and help you, but that was -- it was the eads, that's very unsettling what's happening with the eads. very unsettling. i'm anxious about how that finally plays out. >> no delay. >> just flew right over ross. >> flew right over ross. we may eventually have really quick flights again. did you see this guy who is going to jump out of balloon? he'll break the sound barrier. but as you're falling, since there's no -- what keeps you at terminal velocity is the air. if there's no air, they think he'll he break the speed of sound. >> why is he doing this? >> because he can. >> yeah, because he wants to be the guy to drop from -- >> i jumped out of a about a roon once. it was only, you know -- >> on a bungee cord? >> yeah. >> there was guy that did that and he went right into the ground. >> dumbest thing i've ever done. i'll never do it again. if you're tightly tethered up, it was done safely, but i would never do it again. >> if you ever apply to life insurance, they'll charge you more for that. >>> coming up, another wild weekend on the campaign trail. the gridiron and the diamond. the hits, run, rhetoric. plus the national forecast as the northeast wakes up with a chill in the air. between listene numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. between black and white answers... ...and 1,000 shades of grey duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. >>> big sunday for sports on nbc. drew brees and the new orleans saints broke johnny unitas record. an upset, colts held off the aaron rodgers drive and the packers to win 30-27. the pack missed a last second field goal. on to the baseball diamond, new york yankees won, never mind, but also the reds. reds won -- why are we showing that? reds won 9-0 and they're 2-0 already. reds smacked the san francisco giants to take a 2-0 lead in the best of five series. and college football rankings have been updated. now ranked 20th in the ap poll. knights now 5-0, syracuse are next. but notre dame was -- >> this is huge for notre dame because they haven't won. been doing so well that they lost the demographic. >> lsu got beat by florida and florida looked a lot better. and then georgia was supposed to be good and they got killed by south carolina. and never in my lifeife did i tk kansas state would be at greatest team. >> we'll have harwood up in a moment, i know where you want to go. >> he will poke holes in every part of that study. is he so ready. >> in the meantime some news on the west. >> and it's cold and rainy. should you have your music for this. >> for the ominous weather. that's right. 42 degrees when we came in. had to make the kids put the shorts away. >> remember what happened last october? >> yeah, snowstorm right before halloween. lots of power problems. let's get over to al leex walla at the weather channel. >> no doubt a chill in the air. temperatures stuck in the 40s, almost ten degrees below average. 35 right now in pittsburgh. and it's not just the northeast. look at the southern plains. oklahoma city 20 degrees below average. so a lot of the nation feeling the chill. generally dry in the northeast, although we'll see more clouds than sunshine. new york city only getting up to 55 for the day. a little bit of wet weather here throughout the carolina, down into florida. middle of the nation looks pretty quiet from st. louis to dallas. watch out for rain coming into the midwest later today. back to you. >> thank you very much. let's talk about the election if we could. joining us now, chief washington correspondent john harwood. good morning to you, sir. >> good morning. where were the highlights about the nationals some? >> i was happy to see it. i could feel it coming, too, because they were down 2-1. and i've seen st. louis enough. a great team, they won last year, but -- >> they won last year. and our closer shut the cardinals down. pretty impressive. almost as impressive as the reds going up 2-0. >> would it be more disappointing if you would win the series and then lose badly to the reds? how would you like to play out? might be better to lose now. >> last time i checked -- >> one game better. that's like your two touchdowns -- >> home field advantage, baby. >> like you're two touch donees down in the late four quart in the election. you're dreaming just as much about that. >> let's talk about the election actually. we were talking before the break, so we have the colorado poll saying romney will win. ras mmussen up two for romney. >> do not bring up rasmussen. >> and chuck todd yesterday on meet the press talking about the enthusiasm gap. >> reuters has obama up. >> so how do you read it this morning? >> romney has some momentum from the debate. i think the debate is a more powerful political force in the race than the unemployment numbers that came out. we were all talking about those on friday. but you had more than north of 60 million people watching these two guys on wednesday night and you see some momentum, democrats say the gap has narrowed in some states where obama had a lead. he's getting closer in most of the swing states. up two in rasmussen, down three in gallup. and the question is does this week continue that momentum. the vice president debate in the past has been critical for either accelerating or breaking the momentum one way or the other for the party in power. and we saw dick cheney came through twice for president bush, once in 2000 against joe lieberman when they were continuing the progress bush that in the first debate, second time was in breaking the momentum that john kerry had in 2004. and cheney bested john edwards in 2004, that helped him. so we have to see whether paul ryan, who is very smart policy guy, can beat joe biden who makes shall mistake, but he's been around a long time and he those some thing. p. >> you wrote a column suting the debates ultimately are oftentimes historically irrelevant, that they don't change the outcome. is there something specifically happening this time that's different? >> what i said in that story was that historical pattern is that usually even if you have a surprisingly good first debate for one party or the other, usually they don't change the trajectory of the campaign. but every once in a while, and 2000 is the best example, a whole series of thins come together and the vice presidential debate is important in that process to accelerate the wave or stop it. and that's what we'll find out in kentucky later. >> you said the jobs number doesn't matter. is that in part this whole jack welch thing over the weekend around whether the numbers are real, does that matter in all of this? >> i think the jack welch stuff was crazy talk. and earlier in the year when you guys were down in washington on this, joe and i talked about it, there were between points that i would make. one, nobody messes or manipulates these numbers. but, took i think we exaggerate the importance of the numbers for this reason. the people who will vote on november the 6th know what they feel about the economy already. they're living it every day. so because there's a headline that says 7.8, it's a talking point, but they already know what their friends and neighbors are doing. >> when do we find out how romney is fun raising compared to that 180 million or whatever? >> i think if it was so par with obama's, we would have heard already. i think it's probably behind. >> you don't hear that that's unbecoming to have so much money to spend. just don't hear -- it's alway s the republicans. >> it's not decided by money. nice to have, but there is saturation information for the small number of swing voters. and even if obama beat romney by 20, 30 million, that won't make the difference. obama will have to improve his performance in the debates. >> a gallup poll has romney and obama tied at 47% each. >> that's early for gallup. >> right here. >> their daily track comes out at 1:00, but this could be a different mole. i'm not aware of this new poll. >> this is one they took afterwards. it's just -- >> i'm hearing about it for the first time. >> i think it just hit. it literally just hit. anyway, john, thank you. we'll talk again very soon. when we come back, do rich people who become congressional leaders stay that way? we vlt details of a special capital assets investigation from the "washington post." plus how strong are the bulls? is there hope for the economy without the help of qe-3? that's all ahead. smart comes with 8 airbags,o3 a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. 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[ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. ♪ >>> welcome back to "squawk box." the headlines this morning, apple supplier foxconn is denying reports of a -- >> love it. >> apparently there are reports of a work stoppage at a china assembly plant that makes the iphone 5. can you imagine if we didn't have enough iphone 5s in this country to conn says there haveo incidents, but they did not stop protection. foxconn sounds like a video game. >> or something out of a movie. >> angela merkel visiting greece today. her first visit since the debt crisis began. her reception likely to be hostile. >> that's the guy, thursday night, three hours. had a great time together. interesting views. you would like him a lot. he believes the nanny state has done an awful thing. but the great challenge for him is he's having to try to balance both the interests that he thinks are the right ones with the competing interests of the way the people -- >> were you able to turn him around from all hothose notions? >> no, and i did continue try. there he is. good guy. he's fighting the good fight. >> and walmart and american express set to announce a joint announcement this morning. i don't think it will be a negative scary announcement. but they did not give details. no criminal investigations, i don't think, although it sounds like something bad is coming. it would be related to financial services between the -- now i'm worried. stocks start october with a positive week, but not everyone is convinced the bulls are here to stay. peter, every week you give us the positives and negatives for the week, right, on friday. you can give them to me today for what's going to happen this week that will be positive and what will be negative? you can't, can you? >> well, it's tough, but i can try it predict. >> i look forward to when i get that. what are the big numbers? >> my concern are earnings. and while most companies i'm sure will beat numbers, of the lowered bar in q3, we still may see negative growth for the first time in three years and the guidance is not going to be very good. if you do business overseas, how are you going to have much visibility and actually you'll have a lot less of it. and that's the concern i think of the markets. central bankers have an amazing ability to put beer goggles on investors. but now we'll see the reality of the slowing global economy and its impact on earnings that central bankers can't reverse. >> i like the term negative growth. will we see a surge downward in stock prices? >> rate of slippage may accelerate. >> so many times we say earnings are not growing as quickly, which is different. a diesel krags in a growth rate is different than actually having a negative comparison from a year ago. >> 22 or something straight quarters that -- >> yes, but it's over and now we get to see whether we'll just flat line and before the next move higher or start to roll over. img the i think the next couple quarters we'll disappointme. >> jeff, we said leading into a five year high. is that ben bernanke induced? >> yes, qe, ben bernanke and europe. and it's less about in the short run the fundamentals and much more about the technicals around qe and reducing the tail risk of a break up in europe that has been powering this stock market. as we go forward, really the concerns are much of the good news from qe and monetary policies intervention is already reflected in the prices. and what we'll go into is a period where we're wondering what's going on with regards to spain, will they ask for the money. and as your earlier segments talked about, we'll get into the thick of political uncertainty both for what it means in terms of the election results and what means about fiscal cliff. so it's those things where we're concerned about in the short run. markets have run p a little too fast given the uncertainties that they have to get through in the next couple weeks. >> how long can the u.s. stand alone? >> u.s. is barely avoiding that. we saw 1.3% gdp growth in q2, maybe we'll see 1 1/2 in q3. so we're barely doing that. but certainly low interest rates are helping certain segments of the economy that are keeping from us that. but we're certainly not immune. we're barely on the kisk of a re. and if europe continues to deteriorate, if asia does led by china, well also. >> what can did you think of friday's jobs number? >> i look at the u-6. to me, looking at the u qu-3 is good headline number, but the household survey is extremely volatile. we saw a lot of part-time workers. to me it was a very ordinary mode oak mediocre jobs number. >> we have seen come from over 10% down to 7.8 averaging what supposedly isn't enough just to break even. how it work, i don't know. there's the participation rate has been coming down, part-time workers, a lot of government jobs added. but for some reason, i've always been told you need 200 to 250 to make a dent. 114 got a 300 basis point drop? it's crazy. and there's a reason -- you know what they're calling people that are saying this. they're calling help truthers. throwing them in with the birthers. >> i don't believe that there was conspiracy to make the jobs number -- >> i know that. and anyone that says that will be called a truther. so you don't say the government's lying. you can't say that. yet if you add in two months more government workers than at any it time since 1948 for the past two months, the government can do -- >> but that goes to his point the u-6 number is -- i don't know if it's more accurate. >> it's broader and takes in to account the part-time workers that don't want to be part-time. they want the full-time job. so it's a broader measure of giving us the breadth of the labor market and the health of it and that's why when i say the unchanged number, i sort of ignored the headline number and didn't think it was that big of a deal. >> normally we'd focus on the 114, but, man, when you can go to 7.8 -- accoucan the fundamen catch up with where the market is? can it just tread water and the full fundamentals come up? >> look at all the global printing. >> all right. we have to go. jeff, you'll just have to agree with peter on this one. >> okay. see you next time. >>> if you have any comment ors questi question, e-mail us. still ahead, did you ever wonder how members of congress manage their money or if they go through highs and lows like everybody else? we have the results of a special "washington post" study coming your way. mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. >>> a quick look at u.s. futures. dow looks like it would open 50 points lower, s&p 500 open almost 6 1/2 points off. let's talk movies. the box office was taken to starring lstar i ing -- taken 2. >> second time one of his loved ones is kidnapped. i mean, you're -- don't let them go to europe is what i would -- that's rough. >> for that movie -- >> do do you a taken 3? at that point, what do you say, come on, what are the chances. >> anyway, that was the hollywood report. >> liam neeson's great. >> he is pretty good. >> when we come back, we'll talk about how u.s. lawmakers handle their money. do they play the market, did they fall victim to the financial crisis in the "washington post" unveils the results of a special report. >>> "squawk box" is on facebook. like the show. and get updates, commentary, news and much more. add us to your pages and keep up with what's happening on the show. 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"the washington post" unveiling part one of its special two-part series on congressional finance this weekend, and what it find may surprise you. joining us is kimberly kindy, "washington post's" investigative reporter and one of the authors on this piece. kimberly is may surprise people or may not surprise them that the rich in congress tend to get richer? >> well, yes, maybe that's one of the findings that wouldn't be terribly surprising, but i still think that even within that group of people, the wealthy lawmake lawmakers, there were some surprising results. we looked at dividing them essentially one of the slices, divided them into thirds so we had the upper, you know, third, most wealthy, then the middle, and then the bottom, but that top one-third, when we looked at how they did during the financial crisis, most americans, they experienced a 39% loss in their portfolios, and they're still trying to recover, but with this group of people, they flatlined which a lot of people would have liked to have just flatlined during the crisis and then their wealth just skyrocketed. we also -- sorry, go ahead. >> what was the other point? >> we also saw within that group we also had 72 lawmakers whose wealth doubled and we're talking about people like darrell issa, so it went from 25,000 to 50,000 in assets, we're talking in 2010 he was up to $448 million in his portfolio. >> i thought that was interesting, a lot of people might not realize darrell issa came to congress and was wealthy because he sold a company. maybe you can describe a little bit. just saying he doubled his wealth from 2004 to 2010 may not tell the whole story. >> right, exactly. what darrell issa, elsehe's a g example of how congress is beginning to look more and more. the wealthy can finance campaigns and so more and more we're seeing the wealthy people coming to congress already very wealthy and then once they get to congress, they tend to do very well in terms of stability, no matter what's happening, and in terms of that wealth really going through the roof. and so when he came to congress, i'm sorry, i'm having this fell out myself ear. >> kimberly, my question is, the natural next step is the assumption that they are doing something wrong, trading on their own accounts there or trading on inside information. is that something that "the washington post" is alleging? >> well, no. that's not exactly what this project, this particular project looked at. what we were really looking at was trying to, with this particular story tell people what their assets looked like, what kind of investors they are, how they fare and one of the surprising results was that not everybody is wealthy. we had 20 members of congress who, during, from 2004 to 2010 whose wealth went down 50%, their assets really dropped. we had two dozen whose assets went into the negative. >> i saw steny hoyer was one who did not fair as well during the financial crisis. my question for people who look at that, if you are a viewer at home who is looking at this, does this mean that we're implying that the people who did well had some sort of inside information or otherwise are they just a little better off about managing their money? in darrell issa's case he said he's in more plain vanilla investments at this point versus some of the ups and downs he had seen before. >> this particular story didn't look at that but i would encourage people, because we've been working on stories that looked at this very thing you're talking about, the intersection between what members of congress do by virtue of being in office, earmarks they are able to secure, legislation that they're able to pass and how that intersects with their financial portfolio. >> kimberly, real quick, what percentage of folks in congress are doing this blindly, meaning either they blind trust or it's being managed by somebody else, paul ryan we know, a lot of his money managed by others. how do you look at that issue vis-a-vis the conclusions you've come to? >> well, that definitely is an issue. we have many members of congress who have other people managing their portfolios, in all of those cases when we were asking specific questions about how a bill that he introduced or earmark they got, when that intersected with financial decisions that were made we asked them for the ability to talk to their brokers, and in most cases, yes, lots of them have -- >> kimberly, you got anything on harry reid? i see so much written on the blogosphere that he's got a lot of dough, and hasn't released any tax returns, zero tax returns i think. what did you find out, anything? >> billion in a prior story, not this story, when we looked at earmarks we did find earmarks that was very close to his undeveloped property. >> right, i saw a nice deal here on a land deal in 1998, 700 grand. anyway, just wondered. >> right, exactly. we have a whole host of stories that we've done that look more at this intersection between their duties and their personal assets and that's -- >> that's the best way, not with a couple of, you know, stock tips in congress. i like it ben they do the earmarks, where they buy something and then maybe check the former speaker, too. anyway, right? kimberly, thank you. appreciate it. >> thank you very much for having me. >> all right, see you. >>> oh, it's me. coming up, this morning's top stories set to foreboding music. the rails for the white house, both hitting the campaign trail. former governors face off in the issues and former hp boss carly fiorina, why she calls the board a serial dysfunction, and not like cereal. your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. >>> from the campaign trail to the board room. former hp chief carly fiorina is here on business trends in the tech world and the run for the white house. >>> your money, your vote. former virginia governor james gilmore and former pennsylvania governor ed rendell to talk about the fight for the oval office. >>> what's in store for silicon valley? the second hour of "squawk box" starts right now. >>> good morning. welcome back to "squawk box" here on cnbc. i'm andrew ross sorkin along with joe kernen and becky quick. getting ready in the green room this morning, carly fiorina, former hp chairman and ceo, now vice chair of the national republican senatorial committee, from tech to china spying to the election, her thoughts coming up this morning. at bottom of the hour we'll talk jobs and the election with james gilmore and ed rendell and 8:00 a.m., former chairman of uba americas robert wolf, we'll talk financials and the elections and much more with him. first to beck wii why the morning headlines. >> all right, andrew, thank you very much. >>> good morning, everybody. the futures are indicated lower, right now the dow futures down by about 49 points, the s&p futures are off by over 5 points, this is coming as there are a lot of concerns about the global economy, you can see it just about everywhere. also, it is likely to be a slower than average day on wall street, you have a lot of businesses closed today because of the columbus day holiday. stocks are coming off their first positive weeks in three weeks and the dow's friday close was its highest in nearly five years. you have positive economic signs from china. hsbc service rose from the highest level since may but the world bank is cutting assumptions for growth for china, probably the more powerful china story. >>> negotiations condition between dish network and gannett. at 2:00 p.m. eastern time the deadline passed without agreement but the two sides agreed to keep talking. dish carries gannett stations in 19 cities. >>> unitedhealth care combined with amil, paying $4.9 billion in cash for 90% of amil's outstanding shares. >>> and the house intelligence committee saying that american companies should avoid doing business with china's two leading technology firms because they pose a national security threat, a year-long probe suggests that huawei technologies and zte corporation both suppliers of telecom equipment and mobile phones oppose a security risk and the equipment could be used for spying. the committee recommends the government systems should not include any components made by the companies and they may have violated some u.s. laws. it is likely to become fodder for the u.s. presidential campaign, and there was a big piece -- >> on "60 minutes" and "wall street journal" and chavez won. >> apparently this is just a rumor, the bls the entire of bureau labor statistics from here was flown down to venezuela to monitor the election. >> the chicago guys were thrown down. >> ba-dum-boom. let's get to the story, the venezuelan president hugo chavez as joe was just saying -- >> 54-45. >> comfortable election victory that could extend his rule to 20 years. the next election isn't officially for six years but you had tens of thousands of ecstatic supporters flooding the streets around the presidential palace in downtown caracas, pumped their fists in the air and started shouting chavez's name. enrique capriles, he was beat by more than nine points. it will extend a wave of nationalizations and continue his support for left wing allies. we've heard how important this is for cuba, he has billions at his fingertips because of the oil produced there. this is the country we think has the biggest oil reserves in the world at this point. >> in the world. >> all right. 54-45, what do you think it really was? we'll never know. we'll never know. and the bls and he's got a lot of people hoping that you can get votes from people down there, right? >> that is true. >> his 47% is actually like a 70% down there, so only getting 54 means that out of the 70 that are receiving, even 20-some probably didn't vote for him. >> a lot of that money the billions he's controlled has gone to buy apartments and appliances for people. >> there's no supply of anything down there. i don't even think you can -- >> that's what countered it, high crime levels, blackouts. >> the people that live there may be on the receiving end but there's nothing to receive. the economy is producing nothing in oil. >>> okay, let's talk gas, california, how about that in. >> if we must. what do you have? >> sky high gas prices are rocking the golden state for another day. california drivers are paying on average a record-breaking $4.65 a gallon, for unleaded gas. that's four cents more than they were paying yesterday but there's comebacks, shelling out $5 or more per gallon at some stations. jerry brown taking action in an effort to drive down the cost of gasoline. the governor's allowed winter blend gasoline to be sold in california earlier than usual to bring down the prices. the dramatic surge came after a power outage last monday to a southern california refinery that reduced supply. prices were expected to stabilize in the coming days. >>> let's get to london for an update on the markets this morning overseas, cnbc's ross westgate joins us with an update, has it changed much? there's a lot of red behind you there. >> not an awful lot, andrew, since we spoke about an hour or so ago. not quite at the session low. 8:1 decliners outpacing advancers on the dow jones stock 600. ule though it looks dramatic the numbers aren't bad when you consider the gains we had last week. the cac up nearly 3%, the ftse was up over 2%. today down three-quarters for the ftse. angela merkel will go to greece tomorrow for the first time since the financial cries sois we wi crisis so we'll monitor the reception she gets there but they're still working out whether or not they'll meet conditional ate and a eurozone finance minister's meeting will launch the esm. bae and eads, 13% of the stock come out and say we do not approve of the merger, we don't understand strategic logic and it will jeopardize bae's position in the u.s. defense market as well and impair the commercial prospects for the business. they've said this combination between these two stocks should not happen, not at least if you also have a dual listing t will also impair the liquidity for the stocks as well. that's a big private hairholder coming out, let alone the government shareholders can't agree on it either. and george osbourne, the uk chancellor is speaking at the conservative party conference expecting him to confirm another $10 billion in welfare savings. the key someone spain, 5.65% so yields are slightly lower once again as those yields stay at those levels the spanish government will say it's a fairly manageable situation at the moment so they will keep probably delaying having to ask for a bailout trying to get beyond a referendum in catalouna, a big region in spain. back to you guys. >> ross, last week when the spanish finance minister said that in front of a bunch of people they laughed at him? >> he was up the road, the london school of economics basically said we don't need a bailout and in spain when they talk about bailouts, there are different sorts. i think when he says we don't need that kind of bailout he's talking about the sort of bailout program you got in portugal and ireland and greece which is big condition heavy troika coming in. even if they asked for assistance they're asking not to have a bailout like that. >> we don't node one with conditions, right? >> and we don't need one with inspection teams. >> skyfall, ross, october 26, adele is a theme song for you apparently one of her songs. >> i've got a special report coming up for you just for that film. >> do you? >> previewing the music, too. >> who is the bond girl in this? >> kelly evans. >> ray fein is in. albert finney, holy smokes, coming out the 26th. do you know anything about it? >> i've seen the trailer, looks pretty cool. >> he's killed like 480 people in his films, james bond. if you have, if you feel bad when you kill someone, they're p bad guys. >> he's been like four guys, divide that. >> five if you include ross. >>> comments or questions about anything you see here, e-mail us at squawk@cnbc.com and follow us on twitter @squawkcnbc is our handle. i'm @joesquawk? or you can do my ap.@joesquawkshair o or @joekernenshair. >> jeff mackey is up early. >>> we'll welcome next carly fiorina, at the bottom of the hour, mitt romney gaining ground on president obama in the latest -- i'm not going to say this word. this word has been banned from my vocabulary so i'm not going to say it. >> rasmussen. >> if you do, it's at your own peril. we'll talk to governors on both sides of the aisle about the race for the white house. >>> "squawk box" is on facebook, "like" the show and get upupdates, commentary, news and much more. add to us your pages and keep up with what's happening on the show. "squawk box" on facebook, and cnbc. >>> let's talk business politics and more with our guest host, carly fiorina, former chairman and ceo of hewlett-packard, as well as vice chairman of the republican committee. >> it's a tough story, you know, as i've said many times, meg got dealt a very tough hand, hewlett-packard squandered five years of leadership by failing to invest where necessary. >> who was doing that, herd? >> yes, herd failed to invest. the street loved him, he made his earnings, majored in cost-cutting but technology companies have to do more than cut costs so now they're in a tough spot and they've made a couple bad acquisitions, the value of eds has been written off completely. >> it's been written off? >> written off completely. >> $10 billion autonomy. >> $10 billion in cash. >> that's got to be written off. >> and not paying off and i think the problem now is companies don't have endless time anymore. the competitive landscape is very, very tough, so when someone says i need four or five years to turn around, that's difficult. >> by then a lot of companies that are looking for this total you know, where someone like an ibm or an oracle or something like that, that's who they're competing with, looking for a complete answer to all of their technology needs and they're going to pick before four or five years and be in bed with some of the other competitors, no? >> i think that's the difficulty now. you have businesses in decline printing and pcs, you have a businesses and services that isn't on its feet yet, draining revenue out of that. obviously they're making some important investments in information systems and sales force training but those aren't necessarily turnaround items. >> who is getting all their business. it's not a zero sum game. ibm as well as oracle? >> ibm is doing well. oracle would claim that. larry ellison -- >> if there's no great turnaround story is there anyone you can sell the business to? >> i'm not in there anymore and feel sorry for the management team. i would encourage every strategic alternative to be on the table. it hases to be. >> put a for sale sign up? >> not necessarily but you have to examine carefully what your choices are because -- >> what do you think the other, besides growing organically what are the realistic choices you think they have? >> i think there are potentially some way of restructuring the business, you know, the pc spin-off i did not support at the time and they've pulled that back but now you really have to start to look at things like that. i would just argue you have to consider everything. when we acquired compaq we looked at ten alternatives, ranged from splitting the company up to making totally different acquisitions and that strategic rigor is required now. >> there have been a lot of questions about the board, with all the turmoil the company's gone through for so many years at this point. does the board have the people there who will be pushing for the right discussions around the table? >> well, i don't know, but i would say this, as i wrote in a blog for cnbc a couple months ago, boards are also accountable for the performance of companies and while i wasn't being specific to hewlett-packard i would include hewlett-packard. the board generally at hewlett-packard has destroyed value over five, six, seven years, just like the board has destroyed value at kodak, the board has destroyed value at r.i.m. boards need to be held accountable and the people on the board have changed over time but nevertheless this is a lot of upheaval and a lot of back and forth on hugely important strategic choices. >> do you see tim larts that hewlett-packard, eastman kodak, dow components, brand names, that's what i've worried about in the past, that's going to be the end game? >> obviously i hope not. i have great affection for the company and own stock and have friends there but i guess the reason i bring kodak up is because kodak is a reminder that even a great company with a great brand name can lose its way and run out of time. and that's why strategic alternatives have to be considered. >> you must have some pointed ideas about what to do. it's one thing to criticize a company and this company has been clearly criticized. it's another to say okay here's the problem, but there's a couple of options and here's some ways to fix it. you must have one or two things you've been thinking about. >> so first of all i don't spend all of my time think being hewlett-packard. >> a little bit. >> i guess i would say this, what the company has said is that it believes its future is in unstructured data and in the enterprise space. it has said that's why it acquired autonomy, that's why it remains in the services business, so if that's the case, i guess what i would say is they really have to put forward a very strong argument about why they can win in the enterprise space that will rely on their server business, their storage business, both of which are in decline, and they then have to be very clear about why or whether or if the pc and the printer business that are more consumer facing fit with that enterprise strategy and i don't think they've laid that story out. >> this is kind of an odd twist to think into, but the lead story in "the journal" today, "60 minutes" yesterday was wahwei and this other company in china, don't buy any of these products the u.s. is saying. if you see companies like hp get rid of their pc divisions and see some of the declines of the others, where does it leave us in terms of some of the electronics out there. competition from china undercuts everybody. >> in wawei i'm pleased this congressional committee finally said what i think is clearly true. i remember sitting on the board at cisco when john chambers made what was at the time a courageous decision to sue wawei for theft of intellectual property. there's no question wawei engaged in systematic theft of intellectual property, there's no question in my mind that any large enterprise is connected to the chinese government despite their protestations to the contrary so that's a big deal. it's a huge deal, and i think we have to be smart as both business people and political people about what we're up against and that's why i think we have to be very tough with china about impacting their economic self-interest, because that's the only thing that the chinese respond to is pressure on their economic self-interest, not human rights discussions, none of the rest of it, economic sanctions. >> you buy hewlett-packard or yahoo!? >> i'm not buying either but i'm not a stock picker. >> this is wawa is fine. >> wawa is good, the 7-eleven like. >> are you talking about barbara walters in. >> i'm thirsty, i need some wawa, but wawei, different thing entirely. much more to come, so they're fine. >> they're fine. so we're lucky to have carly here, we'll talk more about this stuff. >>> the battle by the bay the reds in command of the giants. highlights of sports next. as we head to a break check out the futures this morning, we have red arrows across the board, dow looks like it would open 55 points off. 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[ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. ♪ >>> welcome back, everybody. time for sports talk. this is tit for tat, joe, you talked about "scar cllet knight" >> there you go again with the potty mouth. read it and read it with feeling. >> the cincinnati reds have a two-game lead over the san francisco giants. arroyo pitched seven innings giving up one hit and striking out four. it was his first career win -- >>? a playoff game. >> the reds winning 9-0 and taking a 2-0 lead in the nlds. >> just stop right there. >> let answer let this play out a little pit. >> you have to read this next story. >> the yankees and the orioles squared off in the first game of the alds, this game was tied up until the ninth inning when russell martin, the yankees martin smashed a solo homer. the yanks would take on insurance runs in the inning, cc sabathia almost going the distance, and in the nfl the winless saints hosting the chargers, drew brees breaking johnny unitas' record of consecutive passes. new orleans wins over the chargers, 31-24. >> almost looked like peyton was going to do it, too. >> that was huge. >> they were talking about the ongoing rivalry. >> he was on his way. >> he was mad, i watched the end of that game, he was mad at the end. >> he was mad because of the fumble after they got it back, if they had won, i don't know what would have happen they would have needed a field goal. >> we've got to go to break but take a listen in honor of fire prevex week, president obama acknowledging his weak performance at last week's debate but was it enough to put out the flames? this is a lame pun. we hear from former pennsylvania governor ed rendell next and preview this week's vice presidential debate and later, leadership for a new generation a former apple executive who worked closely with steve jobs will join our guest host carly fiorina to talk test success and lessions learned. >>> time for your "squawk box" history lesson. what year did "squawk box" debut? logon and like the facebook page. we're posting classic moments all week long, receive updates and post your comments about the show. "squawk box" on cnbc, and on facebook. numbers... ...and listening to your instinct. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again. between listening to the numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. >>> welcome back to "squawk box." i think what happens during the commercials may be just as interesting if not more so than what's on the air. >>> in the headlines trading on wall street expected to be slower than normal as many businesses are closed for the columbus day holiday. plenty to look forward to later this week with earnings season getting under way tomorrow and the fed set to release its latest beige book wednesday. angela merkel is set to visit greece in a visit likely marked by protests. merkel will meet with the country's prime minister to show support for his coalition government but greek citizens are upset with merkel for her criticism of the country's fiscal situation over the past few years. >>> and apple fire foxconn denying work stoppage. there were several disputes between assembly line workers and quality control personnel but said those disagreements did not stop production. becky? >>> there obviously is big momentum swings for the obama and romney campaigns but we have a long way to go before november 6th. joining success former virginia governor james gill momore, a ry surrogate and former pennsylvania governor ed rendell. good morning, gentlemen. >> good morning. >> we've been watching some of the polls coming out this morning and over the weekend and they show a significant swing after the debate, gallup poll in the post debate october 4th through the 6th on the polling they did see that at least at this point they have romney and obama tied at 47-47, a lot of other polls we've been going through. governor gilmore what do you think happened and what do you think needs to happen at least from the romney campaign perspective as we get into the last two debates? >> well, becky, i think that the democratic party had been painting governor romney as some cartoon, that he didn't like people, didn't like americans. i think the debate allowed people to see him directly and to understand and get a feel for him and to know that he does care not just about some americans but all americans, and that means that he's got to continue to pound out there, that we need to have a better policy, an economic policy and that we need to get more jobs, we get more people employed and frankly you're not going to, unless there's a change in america's economic policy and we can't afford to wait and that's the message that he's got to do. but the good news is that the polls are showing that the people are closing in and that things are getting better, some polls are showing him ahead now in virginia, within one in ohio, ahead in colorado, ahead in florida, and if those things come to fruition, i think he's going to win the presidential election, i'm pretty happy about it. >> governor rendell we noticed that president obama in the last debate did not look like he's prepared. i doubt we'll see the same performance the next time around. what do you think he needs to do? >> well i think he needs to be more aggressive. first of all he needs to be more passionate about his accomplishments and his accomplishments i think are fairly significant. he took over a country that was on the brink of financial collapse, saved the financial syst system, got the american automobile manufacturing system again, we've had half a million manufacturing jobs, best period of manufacturing growth in a while, housing starts are up, consumer confidence is up, automobile sales are up, rail traffic is up, the unemployment rate is under 8%, we're headed in the right direction and i think he's got to be pretty affirmative about that and i think he also has to call governor romney on the inconsistencies we saw in the first debate but i think jim is right, governor romney terrific performance, showed himself to be a leader, really did away with a lot of those preconceived notions that people had and it's really game on. >> they got by accident that -- ed, just listening to you -- >> no, hey, joe, governor romney was responsible for a lot of those himself. >> yeah, right, when you cut out a clip little sound bites. you know how -- >> it was his fault for not getting out. >> yeah but. >> at least you didn't say it, you're not going to call governor romney a liar and a cheater and blame jim lehrer for not -- obama talked four minutes more but that we're going to hear tonight. he's a liar and cheater, that's really a pathetic answer to what happened in that debate. and if he was a liar the president should have called him out on it. why didn't president challenge him? >> somebody want to talk? >> the most important -- >> governor rendell, i'd like to hear governor rendell's response to that first, i'm sorry. >> i don't believe you call people a liar, et cetera. look there's no question -- >> axelrod. >> -- governor romney changed his position in that debate radically. first of all he said he would sign the ryan budget which has a 20% tax cut across the board for everybody including the richest americans. number two he never explained and the president didn't call him on it how he'll account for that almost $5 trillion cut, plus the $2 trillion in military spending that they advocate which the defense department and the generals haven't even asked for. there's been no explanation of that and that's a pretty important issue. the president didn't do a good job framing that issue. there's no question. >> you're such a savvy politician. you're the best, and you know, if you lose a game and say well the other guy cheated that makes you look bad. there's no upside to that. you should be advising his people that's not the way to do this. >> and joe, one other thing i want to say, i think jim realized this, i was around for the, president reagan's first re-election debate, you recall he gave a terrible performance, he wandered in his closing, almost looked like he didn't know where he was and dropped to about five points, walter mondale was five points behind and president reagan went on to win 49 states. >> the most important thing i can tell your viewers is this, you got to put this in perspective and we cannot wait. america has always grown at about 3.2%, we're growing under 2% right now. we've got unemployment that is historic highs and been there for four years. at some point the president has to take responsibility for this and ed knows this. he's had four years to make things significantly better, he said he was going to, and he hasn't. the point is if you wait four more years, look at the loss to the united states of america of people being unemployed. young people coming out of college and can't find jobs. people who have had their careers interrupted, people who are working less than they want to work. the time has come for some vigorous leadership and that means we have to have a change and i think ed knows this, but he's just a great spokesman for the democrats. >> well, two things to respond to that, if i could, becky. >> sure. >> number one the cbo says, the congressional budget office says if the jobs bill that president obama proposed last october, which had components in it, republicans supported, had the republican congress passed that, we would have had 1 million to 2 million new jobs created in the interim. number two what jim leaves out is governor romney's proposal is the same proposal, cut regulations, cut taxes, that president bush undertook and we had four of the five worst job creation numbers in the last 60. >> what romney said on the stage wednesday night was we'd be bringing down rates but you shouldn't expect any type of a tax cut because he's going to get rid of deductions, too, so it would be revenue neutral. >> that is inconsistent with everything he said up to wednesday night. >> no. >> but number two, no, joe, it is. >> it's that non-partisan study found with all those assumptions they didn't have anything that he said so they made all these assumptions, ed. >> he said we would sign the ryan budget, the ryan budget calls for across the board 20% tax cut but hear me out. it's not the tax cut i'm focusing on. when you cut taxes, or leave the bush tax cuts in place, et cetera, and get rid of regulations, that's supposed to generate growth in the economy. well, let the record show in the last six years a60 years our te years of job creation occurred when the marginal tax rate was over 50%. >> oh my god. >> of the top 20 and you can look that up, joe. >> i know, but -- >> we had the best -- >> same unemployment rate for the eight years of clinton as for the eight years of bush, 5.2, 5.3. >> but i'm looking at the last 60 years. >> right. >> cutting taxes and reducing regulations does not produce job growth. and the record backs it up. the record backs it up. >> but that's like talking in a vacuum without any of the external factors. >> not over 60 years. s acraze aas casey stengle saidn look it up. >> over 60 years the united states of america has always grown at about 3.2%. >> i'm talking about job creation. >> you can look it up. >> it is eloquent but the fact is you've got to have decisive ways of increasing investment in this country so you can create jobs that's going to require a change in the law, a change of policy, governor romney is being decisive about it and frankly the president looks very weak and indecisive and doesn't have a plan to make things better. what are we going to do, mark time for another four years? think of the damage that does not just to the country but to individual people. it's time for a change. >> ed, out of curiosity, what time frame was that over the last 60 years, what time period are we talking about? >> 1950 to 2010. >> no, but i mean, when, what time period specifically are you talking about between 1950 and 2010 when we had over 50% tax rates and also the highest job creation? >> you know, becky, i can't tell you offhand but i know that's true. >> we'll look at that. >> to the modern days, bill clinton increased taxes on the top 2% and you heard wailing it was going to be a recession and depression. >> cut taxes on dividend gains. >> and we had 23.5 million new jobs. i'm not saying -- >> let's shift if i may. >> sorry. >> sure, you're the host. >> this is carly fiorina. one of the things that president obama has slammed governor romney for consistently is a lack of specifics, and it's true that governor romney has had a 49-point economic plan up on his website for some time. one of the things that surprised me is president obama said that he had on his website a $4 trillion deficit reduction plan. governor rendell, do you no he what that $4 trillion deficit reduction plan is? >> sure. >> i think the american people would want to know more about that and he never followed through and explained it. >> he's not as specific as he could be on that, too. he said during the debate he would put in place something along the lines of simpson-bowles and you know what simpson-bowles calls for spending cuts, entitlement cuts, defense cuts and raising revenue. so that is i think fairly absolutely clear. look, in terms of specifics, the one important specific, let's assume we take governor romney at his word, he's not going to raise taxes, that the tax cuts and rate are going to be paid for by eliminating loopholes and deductions. governor romney wouldn't and jim lehrer didn't press him on this enough and to be honest president obama did a poor job in not pressing him, he didn't give us one example of a deduction that he would cut. the american people are owed that explanation, big time, guys. >> what i wonder is why president obama didn't embrace simpson-bowles when it came out two years ago. i mean we could have made a lot of progress. >> he got some bad advice, but when he and boehner came close to the big deal, he was embracing simpson-bowles. >> well, simpson-bowles is no panacea either. it raises taxes, reduce investment and reduce jobs. >> paul ryan didn't want to do it either. it's a tough one. >> governors, thank you very much. we'll see you and talk to you again soon >> thank you. >>> coming up next we'll talk about what the tech world can learn from apple, a lesson from a top executive who worked directly with steve jobs. 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[ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business. >>> wefr' back. companies finding themselves in head-to-head competition with. apple are finding it hard to keep up. jay elliott, former senior vice president of apple and author of "management lessones from a controversial genius" jay reported directly to steve jobs and during his tenure apple sales grew from $150 million to more than $3 billion. thank you for joining us, jay. >> thank you. >> quick note you did this in the '80s, through 1986, not during this latest period, but it does raise the following question about apple today and i want to get your thoughts on tech more broadly in a second. when you think about apple post steve jobs and we saw what happened to apple post steve jobs in the '80s, can it keep up? >> absolutely. i think that he's put together a great team, leadership is very important within apple and steve took as much pride in leadership of apple as he did the product itself and he's crafted i think a great team to follow him. he can't be replaced. >> after he left in the '80s and you were there, apple faltered. it's easy to say. >> apple faltered because he had the wrong ceo and a guy who didn't understand the tech business but under current of apple when steve came back the reason they accelerated so successfully is in place was a great culture and great group of people who were still there. apple was in place, unfortunately they didn't have a right product division. >> do you have views on hewlett-packard? >> absolutely. greatest success of apple and part of my book is called the product vision. and hewlett-packard has totally lost its product vision. here they had the greatest printer in the world, they had the printer market, they don't do that anymore. i have all the hp printers, they haven't kept up. the issue with hewlett-packard, what is their product strategy, what is their products. that's what they're missing. >> on the front page of the new york times is a long report on the battle over patents in silicon valley and the impacts it's having. how big of a problem is that? >> it's a huge problem. they have to understand, we have to find some way to bring manufacturing back to the united states and one way we did at apple, we had an automated factory before steve left and we had a way to make things a lot faster, a lot better. >> is it realistic to bring manufacturing of these computers and smartphones and whatnot back to the u.s.? >> i believe it is. >> sorry, james, i agree with jay. you see wages rising in asia. you're not going to bring everything back but even during my time we were still manufacturing servers and storage in the united states. yes, it is possible. the scheme steve jobs had, i can remember in fact taking a walk, this was his version of a meeting we took a walk in the foothills behind stanford university, and he confided in me that day that he was going to open apple stores which was an incredibly bold vision at the time, foolish me, i tried to talk him out of it. i was clearly wrong. here's the this ing steve jobs that many owners don't have the luxury of having. steve jobs was the founder so he had the courage and conviction to do things that a lot of people feel they don't have the latitude to do today and opening retail stores was a huge bet. it's an incredibly tough business. they poured tons of money in it. jay is absolutely right, it was the ultimate showcase for his beautiful products and that's how he described his products as beautiful and he described hewlett-packard printers, i remember him calling me saying carly the printers need to be more beautiful. and he was right. >> jay, here is an operations question. you worked side by side with steve. some people would say he was not a nice guy, and that part of that was the genius, though, in all of this. can you be a nice guy and still finish first? >> yes, you can. in fact, one of the reasons i wrote the book is i don't like some of the books written about him. steve was the greatest leader i've ever worked for. carly is right i probably walked hundreds of miles with steve. he was about understanding where he was going to go. he had some moments. if we look at the positive versus the few negative parts of his personality. it wasn't about you, it was about the product. what are you doing to make our product better and better and better and that's what came out and that's where he'd get testy. the last few years of his life he accelerated everything and that was part of what he was trying to do. >> jay, we have to leave it there but we appreciate your time. of course, the book called "leading apple with steve jobs" we thank you for it. > >> thank you. >>> coming up, having trouble with balancing your portfolio, some people are. does this market have you on edge and are you looking to slash your losers? we'll talk all about that in our next segments and kids don't try this at home. you're looking at a 65-foot knife weighing three tons and a guy who thinks it's smart to walk on the edge of it. with "squawk box" you live on the edge. we're back in just a minute. ♪ [ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ whatever your business challenge, dell has the technology and services to help you solve it. >>> all day long cnbc will check out the performance of different sectors. sima modi put biotech under the microscope. you know the nobel prize for medicine was announced today, stem cells. >> that's right. >> stem cells what they awarded for, you know who is waiting? biting his nails? >> bill clinton. >> bubba is hoping. barack obama won a nobel peace prize before bubba, so did al gore. >> well, if you are looking for beta, biotech might be your answer. the biotech index is up 47% just in year outperforming the s&p 500 by 30%. investors continue to seek out the group for its growth from prospekts. eric schmidt says more and more growth fund managers are taking interest in biotech where earnings are not correlated with the macro environment. ubs writes that alexion is a significant double-digit growth driver but uses the orphan drug model where pricing and reimbursement are insulated, the biotech is up a whopping 400% over the past three years. keep in mind this is a speculative takeout target. another standout stock, gilead sciences is up 70% year-to-date, ubs has it as its top large tech biotech pick, it's attractively trading to a discount to the biotech sector, biogen up 50% in the past year thanks to its strong earnings performance and anticipation riding behind its multiple sclerosis drug bg12 which could get approval by year's end. another is buyout speculation. the firms are on the hunt for under the radar biotech firms, bristol-myers among others making big bets. andrew you've been following that as well. >> thank you for that report. lot of beta. see if there's any alpha. >>> in the next hour of "squawk box" former ubs american chairman robert wolf will join us to talk financials, jobs and the election, mr. obama's favorite banker. and later health care, a major issue for americans in the presidential candidates, the coo of mt. sinai, ken david, is going to join us. a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. which can withstand over three and a half tons. if we want to improve our schools... ...what should we invest in? 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>> yes, no. >> you said yes first. >> no is what i ended with. >> the president of mt. sinai hospital on reducing health costs and improving care. >>> state and local governments desperate to cover budget shortfalls are turning to sin for salvation. we're going to get a live report from the third casino to open in ohio in less than a year. the third hour of "squawk box" starts right now. ♪ >>> welcome back to "squawk box." i'm joe kernen with long with becky quick and andrew -- what do you want to be, dice, power. >> they shaved my head and hair off. >> joe kernen's hair and you're becky's heart or something. becky's brain. >> yep. >> our guest host is carly fiorina, vice chairman of the republican senatorial committee and we're going to talk about a lot of stuff, but in addition with carly we also have, talk politics and jobs with robert wolf, former chairman of ubs americas and fund-raiser for president obama's campaign. we need a new picture, i think, because he's much thinner now and unbelievable. no lap stuff or anything, this is just you, just being a man. >> just working out. eating better. >> eating better and working out. >> and my kids giving me a little hell. >> tv show, the cam camera, that's my problem. i don't look like this even now. you know how i look to you, i don't look like this because this camera is adding weight to me right now. >> carly will devise the new technology that you lose weight on tv. >> there you go. take eight pounds off. maybe this guy will help us, health reform with dr. ken davis, president and ceo of mt. sinai hospital and the best investment ideas from some of america's top portfolio managers, steve romick of first pacific advisers at 8:40. becky has your morning headlines. >> just one we've been talking about just for the introduction, and here answer the ticker. >> because this is off the ticker. >> hugo chavez has been reelected as venezuela's president. this is the closest race he's faced in his nearly 14 years in office. he beat out his challenger by a 54-45% margin. back in 2006 he won by 27 points. his challenger capriles accused chavez of using the nation's oil wealth to his advantage, not surprising to anybody who has been watching what's been happening but the victory gives chavez a fresh endorsement of his socialist agenda, good news for cuba, who have been close friends of his as well. >> good news for socialists everywhere. >> there you go. >> didn't mention any names. >>> alcoa reporting third quarter results after the close tomorrow. predicting s&p 500 results would drop by 2.6%, snapping 11 straight quarters of gains since january of 2009. 78% of the companies have warned that is the highest negative outlook since 2006 and -- >> it would be amazinamazing. >> we know things are not great. we see the slowing economy but again maybe the analysts can get their ideas a little more lowered after all these warnings. >> the market is at a five-year high. that's the disconnect. i don't think it necessarily means the market comes down with the fed, you need more time for the fundamentals to come up beneath the market and that's the reason the fed is -- >> if you look at the u.s. it's the best house in a bad neighborhood when you look around the globe where people are looking with the economies. in the meantime also a multibillion-dollar health care deal involving a dow component company this morning, unitedhealth, the newest member of the dow is combining with amil, brazil's largest health care company. unitedhealth will pay $4.3 billion in cash for 90% of the company's outstanding shares, the deal worth $4.9 billion when tax benefits are included. they expect the transaction to accretive to earnings in 2013. >>> lelt answer get a check on the markets this morning. we're seeing red arrows. the dow futures down by 46 points, s&p futures off by close to 9. overseas in asia, red arrows most of the way. hang seng down by 187 points. in japan the nikkei closed down. concerns about the global economy and what to think of greece and spain right now in france the cac is off by 37 points a drop of about 1% and in germany the dax is down by 1.2%. >>> the for the fourth straight year the u.s. government ended its fiscal year with a deficit over $1 trillion. joining us wob b ris robert wol. member of the president's council on jobs and competitiveness, we say he's one of mr. obama's favorite bankers. before we get to the deficit and all of the debates last week. were you depressed, unhappy, miserable? give us an adjective. >> well one, i'm not depressed. i see joe smiling. he's not going to yell at me today. >> there's a number of polls, an enthusiasm gap. >> i wouldn't say that. governor romney had a very good debate, no question, he put on a great show, but to me i think we should be focusing, this is a business show on friday's unemployment number, which was a great number, and not a surprise, based on what the economy's been doing over the last three years. >> 114,000 is not a great number. >> 140,000 on average over the last six months. >> what came out on friday was below expectations for 114,000. >> you know what revisions has done each month so we should look to see where the revisions are. i think if you look over this year, you're averaging about 140,000, i think we should -- >> 140,000 is anemic and not enough to bring down the rate even though it has somehow. >> i would look at it differently. i think over the last three years the first thing that gets jobs going is you got to increase the average hour work week. we're now at a prerecession level. once they fill that void then you start hiring again, over the last three years -- i know, joe, you're waiting to -- >> no, even people that say -- >> joe if i could finish for 30 seconds? >> we have more to go. you at least admit that. >> absolutely. i'm not saying it's blockbuster. give me the 30 seconds. >> you have 30 seconds all yours. >> over the last three years you have manufacturing up, you have the housing foundations starting to be built certainly not where we want it to be yet but starting to have a good foundation, foreclosures are down, you have foreign direct and exports improving. it is getting better but not near where we want to be. the unemployment coming down seems to make sense. >> have you talked to the president since the debates? >> no. >> if you did talk to the president before the next debate, what would you tell him? >> i would probably say to the president, talk about all, talk about your vision that's been working. >> be more aggressive? >> listen, i've played basketball with the guy. he's the guy who likes the ball in his hands. i would tell him take the ball in his hands. >> some decided he was not playing ball last wednesday. >> i'm not a debate professional. i've been advising him on the economy and i think actually the trajectory is in the right direction. this debate, listen, romney had a great performance, i would actually challenge a lot of the facts but that's for a different show, possibly, but i think at the end of the day it's one day. we could go back to romney's 47% where that was 30 days. this is one day, let's see what happens the next week and the next week and we'll all have a vote coming up in the early november. >> you challenged me when i mentioned this enthusiasm gap and chuck todd was on "meet the press" over the weekend showing some startling numbers about both from an age perspective, minorities, that there is a distinct gap in terms of the enthusiasm to get out to the polls and vote. >> i think four years ago there was a 20-point, the democrats had a 20-point lead in enthusiasm gap and now it's a seven-point lead for the republicans. >> i don't look at the polls like everyone studies it, but i looked at where he was in wisconsin the other day and he had 30,000 people there, and it seemed like it was 2008 all over again. i'm not questioning the excitement's different in '08 than today. that's factual. >> tell us the experience on the money side. you raise money for the president. there's still money to be raised. what kind of feedback are you getting now? >> well i think the number just showed he raised 180 million for the last month which is maybe one of the best months in presidential history and i think more importantly, it's from a grassroots level, the average thing was like $53. >> have you had any wall street people change their mind, shift their view especially this is what i was curious, given that the polls up to two weeks ago seemed to be going his way, whether there are folks on wall street who said to themselves i might have to deal with this guy for the next four years. i've been bashing him but i have to play both sides? >> you know i think wall street's not that dissimilar from where the country is. seems like 47% are republican, 47% are democrat, and then everyone's trying to gauge the 6% in the middle, and i think that's to be determined. the polls are tight and you know, let's see what happens the next 30 days. there's another debate coming up. >> are you guys going to hold hands now? >> unwf the thinone of the thin surprise something how different the facts can be presented about the economy. you said the economy is going in the right direction. the truth is, exports are now fading, manufacturing jobs are being lost, poverty is the at the highest rate in 60 plus years, small business creation at the lowest point in 40 years. private job creation is deceleratin decelerating. >> i would challenge those facts because one, we've had double-digit increases in exports for every year that president's been in office which is the first time in decades opinion. >> they're starting to decline. >> you're looking aa monthly basis. manufacturing is the best since the early '90s. if we started talking as businesspeople. >> look at the second half. >> well then obviously there's no way the unemployment numbers could be wrong because manufacturing was down, you think he put that down, too? >> i don't think there's a conspiracy by the way just to be clear. but i think private job creation is clearly decelerating. more people are taking part-time work who want full time work. we have low labor rate participation rates. small business creation is going down. those are all facts. >> but the facts are versus the last 31 months we have hey over 5 million jobs created, if you look at the average -- >> go back to his full presidency, why do you do 31 months? >> go back to the full presidency. >> i accept that number. >> we also have to include the average hour work week which was up an hour, another 2 million job elive equivalents. >> during the debates, not the president but mr. romney did was go directly after the banks. are you surprised by that? >> five banks actually he went after. >> some of your pals and some people you've worked with. i thought both of you would have views. >> it's absolutely right, it's crazy to declare five banks too big to fail and also correct community and regional banks are suffering and they had nothing to do with the meltdown on wall street. >> his facts are incorrect. it's not five, it's more like 40 and the systemically important institutions has not yet been fully defined yet and may not only include banks. so i think when you say five banks those are the five largest banks but it's not the ohm banks being focused on. ask aig when they pay back if they're focused on by the fed now. so the facts were just wrong that he gave a great show but his facts were wrong. >> you know what my favorite moment in the entire debate was? >> what's that? >> when president obama said for the thousandth time he's going to stop the tax break for shipping jobs overseas. governor romney said i've been in business for 25 years and i have no idea what you're talking about because president obama didn't know what he was talking about. >> he'll come back with a different debate putting money overseas, i think he took the high road on that one. >> robert we have to leave it there. thank you for coming here and congratulations on the new row, reuters online. david rubenstein this week? >> yes, on thursday and mentioned your "new york times" article. thank you for having me on. >> thank you, absolutely. >> nice to meet you. >> nice to meet you. >>> when we come back repairing america's health system with dr. ken davis, ceo of mt. sinai hospital. >>> and brian shactman joins us from the third casino to open in ohio in less than a year. brian? >> reporter: well, becky, right behind me we have about 3,000 slot machines and more than 70 gaming tables, part of a national trend, the casinos in for jobs and tax revenue and for a company like penn national gaming it's about the bottom and top line. we'll talk to their president and coo next on "squawk box." [ horn honks ] hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business. >>> is this just gambling? >> it is gambling. they have a convention center where they'll do other things but in terms of -- listen, people that gamble are taking money they could save and invest and they're gambling it. they'll have one in cincinnati by spring of 2013, coming to your town as well. ohio will go from no casinos to four in a year and a half. in terms of overall tax revenue about $8 billion was raised from casino gambling in this country and penn national gaming is opening this one, the hollywood casino in columbus today, it's their second one. we bring in tim wilmont, president and coo. why are you of confident as your second one in ohio this will be a good return on investment? >> we opened in toledo in late may with a $320 million investment and $400 million investment in columbus. there's only one other casino. we think the investment will generate great returns for shareholders and there's no other casinos besides the other one down the road. we don't expect any other competition in the foreseeable future. >> having said that we had reports of two that opened in cleveland and toledo, have already seen month over month declines in revenue. aren't you worried when you go zero to four you might be cannibalizing why you have? >> absolutely not. there's a honeymoon period where revenue is left and we see a drop off and it will pick up again. look at the state of pennsylvania about the same population as the state of ohio they already have 12 casinos, going to add two more and doing very well. we think there's no concern about saturation here in the state of ohio. >> when it comes to taxes, 33% of all casino revenue in ohio is taxed at a rate of 33%. this is also a jobs story as well, talk about the jobs impact of this particular casino has had. >> when we passed this in 2009, jobs was a key message. this investment here created 3,500 construction jobs and we're going to open today with 2,000 full time and part-time jobs. that was the big message that passed in '09. we're delivering on the promise. >> joe they said they had 56,000 applicants for 2,000 jobs, it's easier to get into mit than it is to get a job at the hollywood casino here in columbus. the story is about the states and municipalities trying to get more tax revenue and turning to casinos and you've been in the gaming industry for a couple of decades now. is it easier to get a project like this done in 2012 than 200012347. >> there's no question. we passed the referendum statewide in 2009. previously four times the state of ohio voters failed to pass it. the fifth time with the economy as it was in 2009 got the message across that jobs was going to be the answer to passing this initiative and it finally passed the fifth time. >> do you feel like, is there anything on the back end of this? we talked about sin for salvation and joe kernen talked about what else is there for sin outside of gambling that the people that are here are the people that maybe shouldn't be gambling, a sense of irony in the great recession we're getting tax revenue from maybe the people that need the money the most. >> as an industry we take seriously the poshs of making sure people don't have a problem gaming. we spend a lot of money on research and treatment. it's a very small percentage of the population that has that problem. the vast majority of people that come here look at it as a night out, entertainment, spend their $100, have a dinner at one of our restaurants and enjoy live entertainment. we feel comfortable we're offering a safe environment for consumers. >> people look at penn national gaming, what differentiates you from your cohorts in this space? >> we think given our conservative balance sheet and ability to invest capital wisely we get great returns on investment. there's $400 million here, the $320 million will be great returns. race tracks moving from toledo and here in columbus up to youngstown, they're going to be great investments. we' we're disciplined in allocating capital. >> it's a 3.25 billion market cap. back to you. >> they are good jobs, though, ryan, you can see why people want, working in a casino, it beats digging ditches. how many, 58,000 applications for 2,000 positions? >> right. i don't think you can get in, joe. that's right. and the wrinkle here, we ran into a couple in pennsylvania, it's a smoke-free floor, too, which is actually good because this is the only suit i have on the road and i can't have it stinken up on my way home. >> i'm not sure what you're talking about the poor conventioneers where the real sins are committed. appreciate it, thanks for the report. go down and say hi, go to reds country if you get a chance, must be a lot of excitement. >> i will. good win for you guys, yes, absolutely. >> right, thanks. see you. >>> coming up, reducing health care costs and increasing the level of care, that's the challenge health administrators are facing aed half the presidential election, dr. ken davis, president and ceo of mt. sinai hospital will join us at the bottom of the hour and "squawk" tomorrow we'll talk health care and politics with ken langone, chairman of invemed associates. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again. >>> welcome back, everybody. sky high gas prices rocking the golden state another day. california drivers are paying $4.65, record-beaking per gallon of gas, four cents more than yesterday. get this, they are shelling out $5 or more a gallon at some stations. governor jerry brown is taking action, now allowing winter blend gasoline to be sold in california about three weeks earlier than usual to try to bring down the prices. >>> the dramatic surge came after a power outage last monday at a southern california refinery that reduced supply. the refinery came back online friday and prices are expected to stabilize in the coming days. >>> a "squawk" sports report for you. ♪ the college football rankings have been updated and the rutgers scarlet knights are ranked 20th in the ap poll, number 19 in the "usa today" poll after beating uconn 19-3 and the knights are now 5-0 with syracuse next on the schedule. >>> when we come back the presidential candidates battling over health care at the debate last week. >> it will cost $2,500 a year more than traditional insurance. >> if you repeal it, what happens is those seniors right away are going to be paying $600 more in prescription care. >> up next, with he will talk health reform with dr. kenneth davis, the ceo of mt. sinai hospital. "squawk" will be right back. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. >>> welcome back to "squawk box" this morning. in the headlines unitedhealthgroup is buying 90% of brazil's largest health company amil. >>> and a house intelligence committee reports china's two top telecom makers should be kept out of the market. huawei and zte, following an 11-month investigation of the two firms. nationwide gasoline prices have barely budged, despite california's price hike. putting the average price $3.84 per gallon, up a half cent. other than the west prices were down about 3 to 12 cents. joe? >>> hi, andrew. you're kind of interrupting me right now, i was talking to dr. davis. >> you were in can frgs? conversation? >> yes, i was. i thought we had the headlines and needed to -- >> you were talking cancer research. >> serious stuff here. >> what i was saying, dr. bob weinberg in that group postulated the existence of an onca gene and said we will find one and we know how many have been found at this point. dr. ken davis president and ceo of mt. sinai hospital and it's good to see you and just in passing we talked about a couple of things, the prospect for alzheimer's, and preventative medicine and using what we're learning on the lab bench to tackle health care we could do unbelievable things if we found a couple of things that could be more than just palleted. >> i think you're right. if we could begin to align the health care agenda and the scientific agenda in the country, i think we can do a lot better. if we could recognize how much cost alzheimer's disease and other chronic diseases like type ii diabetes is to the health care system then we could say to the nih we really need a larger effort in this. then we could say to our legislatures, what are we going to do around patent law that will incentivize companies to develop drugs in this area. we could do a lot more. >> that's what i wanted and whether it's the if,fda or pate law, what is coming up the works. >> in cancer there's extraordinary developments. decades ago we started a war on cancer and people have been appropriately disappointed with where are the big break-throughs. the big break-throughs are about to happen. thanks to what we've learned about genetics and the large studies done across tens of thousands of people, we're identifying that there are a series of mutations, many different mutations that can lead to what looks like the same cancer but it's not the same cancer. there are lots of different kinds of, evidently a lot of different kinds of colon cancer, of lung cancer, of prostate cancer, and we can go on and on. >> does that mean five to ten years we'll be able to battle back at some of these killers? >> i think so. what happens is all those mutations provide new targets, and those targets are all accessible for drug development. so i see the possibility that we're really going to make major break-throughs here around cancer biology. i'm a little less excited about what we're going to do in alzheimer's disease and here's the reason. what we now know about alzheimer's disease is that the change in your brain the plaques and the tangles that ultimate leelead to brain failure could be happening 25 years before they're symptomatic, could be happening to me and you right now and we don't know it. we could get an amyloid scan and get an indication we're starting to have plaques, that means we have to give the drugs 15 to 25 years before people are symptomatic. now imagine if we start to do clinical trials that have to take 15 years before we have an answer. there's no patent life at the end of that so there's no incentive. >> there's an argument for patent law change if you can find something, maybe there's something genetic that could help know you are more likely to be affected by this. >> right, but what we'd really like to do, i would propose is to say if you're going to be the first compound for alzheimer's disease, that really alters course you get 12 years of exclusivity for that drug no matter what the patent live is. do that in other parts of the world for first of a kind break-through drug and we would identify the break-throughs to bend the health curve. >> it's common sense, and as a cancer survivor i'm delighted to hear you say you're excited about progress in cancer but it's such common sense when you say let's align the scientific agenda of the nation with the big cost drivers in medicine. >> yes. >> and of course patent law, et cetera. what would it take to align the scientific agenda and the cost drivers in health care? who would do that? who would cause that to happen? >> well, the congress has been very responsive to patient groups that meet with him and make i think a compelling case for why their disease is special. i think if we can get those groups to also talk with an administration, also talk with the nih, form some kind of consensus between what the country needs and what the patients need, perhaps we could do it. >> because there's now at least unanimity it would seem to me about very little but there appears to be unanimous agreement about the top five diseases, chronic diseases, that are cost drivers in health care, there seems to be agreement that we need to do something to preventative, to incentivize the right behavior, so it seems as though we're closer and yet perhaps it's the election season, but to me it feels like we're further and further away from agreement on what it takes to actually get the health care system moving in the right direction. >> part of the issue in the scientific budget is right now, 93 out of 100 grants that are applications for new science are turned down because there isn't enough money for all the science that's possible. now as long as we're under the kind of fiscal constraints that we are and nih doesn't have the priority it might otherwise have, we're going to have most of our grants not funded. and when there is so much good science out there, it's hard in an environment in which you're saying essentially nine out of ten grants are unfunded that we should fund fewer for some of the science that isn't directly relevant to what may be the cost drivers in health care today. >> so we need more money in r&d. >> r&d is hardly the answer. >> getting back to cancer cure, what is the overriding conclusion we're coming to, since there are so many different cancers. an individual could have a cancer specific to his own genotype. is it trying to find something on the surface of the cancer cell recognized by the immune system, will that be the best way to do it? >> i think the best way to do it is going to be a genome scan of your cancer so that we can find the mutation in your cancer and give you targeted therapies. >> how do you deal with that, killing the cancer you have? >> killing the cancer. >> you have to find it, see what's expressed on the surface and kill it with your own immune system? >> you might be able to do it that way. what you want to do is normalize the mutation that's causing the cells to become out of control, and there are so many different ways that can happen, we've just got to identity it and not hit it with a sledgehammer but hit it with, you know, a specific. >> like a nuclear bomb, with a snipe per. >> scalpel. >> really be specific. that's on the horizon. >> so many things. and rightly so, and when did we sequence the genome, 15 years already? >> it was in the clinton administration, and you know, now we're really reaping the benefits of that. >> and you think that, i remember there was a merger between smith klein and glaxo, taking chemistry and genome and putting it together and i thought in two years we'd be living to 3,000 years old. didn't happen, nothing goes from the lab bench to the bedside. takes so long. >> takes more time than we'd like. you've got to show it's safe, got to show it gets to the right place. >> and there are so many side effects to all of it, profile is huge for all of these things and getting to the point where it needs to get as well. all right. you shouldn't be here, you should be back there doing something i think, right? anyway, go work on something. thank you for coming in, we appreciate it. >> good to be here. >> thanks, doctor. >>> when we come back all this week we've been bringing you interviews with some of the country's top performing fund managers, they'll bring you their best investing ideas and tell what you is working in their portfolios now, that is right after this. steven romick is the portfolio manager at first pacific advisers, he will join us from los angeles and "squawk" will be back. >>> "squawk box" is on facebook. 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"squawk box" on facebook, and cnbc. ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. wooohooo....hahaahahaha! oh...there you go. wooohooo....hahaahahaha! i'm gonna stand up to her! no you're not. i know. you know ronny folks who save hundreds of dollars switching to geico sure are happy. how happy are they jimmy? happier than a witch in a broom factory. get happy. get geico. fifteen minutes could save you fifteen percent or more. between black and white answers... ...and 1,000 shades of grey duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. >>> welcome back to "squawk box." futures right now are down 40 points or so, they've been all day. walmart and american express, two dow components teaming up in hopes of grabbing a share of the prepaid card market. blue bird prepaid card at walmart stars. big bird is yellow, this is bird. following a year of testing, it's pitched as a low cost alternative to traditional checking accounts. >> you say blue bird and i think twitter. >> the little guy. >> tweet, tweet, tweet. trademark. anyway. >>> this week we are featuring a selection of the best mutual fund managers and their top fikz. today the five-star rated fpa crescent fund up 19% over the last year and posted annualized returns exceeding 9% over the last decade. joining us from is steve romick, portfolio manager of the fda crescent fund and manager of first pacific advisers. thank you for joining us. >> thank you. >> impressive returns that you have not only over the last year but particularly over the last decade to be able to wrack up returns like that. you say the real secret to investing is trying to find investments that are more risk-free, not necessarily trying to beat the market. you want to explain that to us? >> well, our goal is to provide equity rates of return with less risk than the market. our goal is not to seek that which is risk free, but we do believe that we can accomplish delivering those types of returns by kind of investing across the capital structure so what we do might be different than the average mutual fund, we're not just bonds, not just stocks. we diversify across a whole different basket of asset classes. equity is the largest component. we do a lot of high yield bonds, we own mortgage home loans and farmlands and a smattering of relatively odd things by comparison. >> your bond position in the chart we looked at was only 3.7%. you think now is not the time for bond investing. >> corporate bond investment certainly isn't as far as we're concerned. the last couple of years $80 billion some odd of triple c and non-rated debt issued which is larger than in 2006 and '07. spreads don't look unusually narrow. at the same time that you have the starting yield which is quite low. so you're not getting paid to play if you're buying what they call high yield bonds that aren't high. >> let's talk about some of your favorite picks. you like renault and i guess that's unusual because people think europe and they think about all the distress that's happening there. >> what we generally tend to do is look for dislocation of markets. we're looking for that which is out of favor and a lot is out of favor in the european automotive business. in the case of renault they own stakes in nissan, 44% stake there, and 7% stake in volvo and if as well as a less than 2% stake in daimler. you add up the stake of the companies which are all public they exceed the value of renault so you can actually be long renault as we are and we are short volvo and nissan not because we have a negative view as to volvo and nissan's prospects but because volume sew and nissan's value exceeds regnr renau renault. the market is paying us 2.5 to 3 billion euros for so. >> we had a conversation with the doctor who runs mt. sinai and he was talking about promising things coming down the road. one of the things you like is om omnicare and the institutional pharmacy business. what do you see happening there? >> this is not about something new and exciting and promising coming down the road with respect to technology that is going to drive us into invention in this business but the omnicare business is an institutional pharmacy and they deliver drugs to nursing homes amongst other places as well. nursing homes is a big part of the business and they have more than 40% share, three times the nearest competitor and this is a business that is going to benefit from certainly the aging of america but as important in that, as that is the fact there's a new management team here and this is a business that was not terrible well run in the past, this is a business that was poorly managed and now the new management team, making the appropriate investment in people, as well as technology, they are going to increase the wide and deep competitive mode they have. >> does it matter who wins the next election and whether or not obama care sticks around for that pick? >> that will not affect us. we think in terms of elections and what could happen coming up, if any investment we made would be too dependent upon one party winning then we wouldn't be making that investment. >> you also like farmland. could you explain your thesis there? >> farmland is something that you really don't find in most mutual funds and we unfortunately couldn't when we first were buying this own as much as we wanted to because of the liquid nature of it, but farmland is going to benefit in a few different ways. one you could look at the benefit that people think gold have and pharma will benefit in ab an inflationary market and with the currencies but unlike gold it doesn't have a cost of carry. farmland, if you look around the world the population growth is 0.9% and arable acreage over 2.3. people are feeding more in developed economies and emerging economies are eating better, means more proteen in their diets. that gulf between 0.3 and 0.9 widens further still and there is continued to be decelerating productivity improvements on land, so there could be a point in time where we end up with much higher food prices even with what we see today. >> steven thank you for coming on and hope to see you again soon. >> thank you. >>> coming up don't start your trading week without a healthy dose of jim cramer. we'll head down to the new york stock exchange to talk to him, after this short break. >>> ready or not, the stock of the day is coming up, you're watching "squawk box" on cnbc. first in business worldwide. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to tdd#: 1-800-345-2550 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-800-836-8799. >>> welcome back to "squawk box" this morning. let's get down to the new york stock exchange where jim cramer joi joins now. we've been talking about this "financial times" article. where are you on this? >> "usa today" had a very good piece about this, too. this is a period where we peaked in earnings. and what's happened is that unless it's totally domestically related, governor rendell had good insight, unless it's domestic housing, unless it is auto, you're just not going to do it. people are trying to ratchet down expectations ahead of the quarter. but we peaked because europe got weak and companies like caterpillar and bank of america saying they're not going to make the quarter. there's a lot of that out there. >> and therefore you do what? >> you fall back on yield. you have company that is gi you a better rate than the cds, many are international companies in health care. we're going to see a transaction translation, a lot of the numbers we thought were going to be bad because of currency will be good because a lot of companies pegged the euro at 1.29. that's going to be the saving grace. you're going to retreat back to yield. that's going to work. >> let's talk hp. any hope at all? >> no. no. >> zero? >> look, there's a generation coming up. that generation does not know hewlett-packard. it does not know dell. it knows apple. those people will be in positions of power within the next five, six years. so the idea that it doesn't matter that jobs created a company that has pizzazz, that has heat, is just wrong. there are a lot of i.t. people who are going to lose their jobs because they back hewlett-packard and dell. we're going to try to figure out why they ever went with hewlett-packard and why they went with dell. this is the world that we're coming to. but hewlett-packard will not admit that because no one ever wants to say the magic word. apple's got the better mousetrap. >> i think jim is raising the great point of why companies haveless time today than they did in the past. the competitive marketplace moves so quickly now that perhaps you could say ten years ago that you have five years to turn things around. but no one has that kind of time right now. that's why i think strategic alternatives have to be on the table. >> totally right, carley. whenever you go to a meeting with any ceo, they bring out their ipad. >> me, too. >> right. i have companies that tell you, listen, you have to play with hewlett and you have to play with dell. if you get to the i.t. person, they are using apple. but the deal's been cut, whoever is doing i.t. that says you have to own dell and hewlett-packard, they have children. and their children laugh at them. >> we're going to leave it there, jim. nice note, sort of, to leave it on. but anyway. we'll see you in a few minutes, jim. >> thank you. >>> when we come back, we have the stock of the day and closing shots from carley. stick around. we'll be right back. [ male announcer ] the 2013 smart comes with 8 airbags, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. which can withstand over three and a half tons. when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this. when we got married. i had three kids. and she became the full time mother of three. it was soccer, and ballet, and cheerleading, and baseball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule. [ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. ♪ >>> stock of the day, today, netflix. morgan stanley upgrading the stock to overweight from equal weight. it doesn't see amazon's growing video business as a threat. >> our guest host today that be carly fiorina, the former chairman of hewlett-packard. the lead story in "the wall street journal" today is all about how a congressional investigation has found that whileway technologies is a national security threat and has likely broken u.s. law. they're advising u.s. companies not to do business with them. that's a huge step. >> it's a huge step. it's the right step. i'm delighted that they made that finding. i think there's no question the finding is correct. and i think the only way to deal with china going forward is to be forthright about putting pressure on what they perceive to be their economic self-interest. it is the only thing the chinese respond to. there's no question they've made a habit of stealing intellectual property. there's no doubt in my mind that an enterprise of that size is aligned with the chinese government. good for us. we've woken up to that. now we need to keep the pressure on the chinese government to play fair if they want to be in the wto and be a global trading partner. >> used to be the chinese were the biggest buyers of our treasuries. obviously now the fed's beating them out. if you look at the chinese as owning so many of our treasuries and in the past talking about how they would use warfare from a financial perspective against other nations. how much do we need to worry about that and how we deal with them? >> obviously it's a very trickily situation. i personally think governor romney laid out a fantastic test in the last debate when he says, does a government program justify borrowing more money from the chinese? i think that's how we should be thinking about it -- >> he did it with big bird. >> on the other hand, we cannot be afraid to deal with china as an equal. the chinese are very commercially minded. they are focused intently on growing their economy and creating jobs. we have leverage in this relationship as well. but we have to use it. and i don't think wee
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Oct 2, 2012 6:00am EDT
start in the final quarter of the year. the dow and s&p both closing higher yesterday, the nasdaq, though, did slip slightly. october as you probably know historically is considered a rough one for stocks. that's in large part because of those big crashes that we had back in 1929 and then in 1987. but not lately. it is worth noting that the dow has not posted an october loss since 2008. so cross your fingers on this one. we do have a theme this morning, the hunt if value. we have three great guests who will be here to help you find places to thrive. first up is sam zell. he's our guest host today. we'll also be joined by bill ackman. so a lot to get through. also cliff robbins. and the heart and soul of the ryder cup team will be visiting us in studio. ian poulter gave the team a boost of confidence. yes, basically it is all about ian poulter. he is the reason they won this cup. on sunday, he defeated webb simpson in singles in the come from behind win. more points than any player on either team. polster will ste poulter will join us at 6:45 eastern time. >>> european shares are under a lot of pressure in early trading today, hurt in large part by doubts about the spanish bailout. reuters reporting spain is ready to request a rescue as early as next weekend, but german officials reportedly saying madrid should hold off. the news is creating a lot of confusion among investors and we'll check in with ross westgate in london in just a few minutes to talk about that. in asian market news, australia central bank cutting its main cash rate by a quarter point today to 3.25%. policymakers say the growth outlook for next year looks a little weaker while inflation nation likely to remain contained within it target. and on the u.s. economic calendar today, monthly auto sales. analysts are looking for an annual sales rate of about 14.5 million new cars and trucks for the month. about the same as august, which is the strongest month of the year. among the katla tests, low interest rates, high trade-in values and new models. joe, can we buy and you new cyo new car? >> i've done that. not for me. we went big. we don't put a lot of miles on the car. >> how big did you go? >> i don't think you can get any bigger. >> we have a suburban. >> this is a suburban from -- this is like a suburban, but from a company that didn't take a bailout. >> an expedition? >> no. it's like an expedition, but it gives a little bit more panache. >> oh, the cadillac? >> no. that would be by a bailout. >> don't ask me cars. i knew ford, but -- >> toyota -- >> no. i'm not going across -- i'm buying american. >> who is it? >> it's a navigator. a lincoln navigator. >> all right. >> you but it's like a land yacht. because it has an l next to -- which means it has -- >> you need a big car.because i which means it has -- >> you need a big car. >> i promise the carbon footprint -- we don't drive it very much. we put like 3,000 miles a year on it. >> it's okay. that's -- >> i promise you, 3,000 miles. >> don't worry about it. >> small footprint. >> compared to what jeeves is doing every day, i can't speak. >> you know i have small feet. no, i don't have -- i'm talking about my carbon footprint is small. you have some big schlonkers. they're like 13s. >> no, 12s. >> high five. you go. >> i don't think that the hands and feet -- >> in corporate news, new york's attorney general -- of it area spitzer, do we ever think anyone is doing based on what they want to do? and there's an election coming up. >> do we ever -- especially they start out lawyers. so you're suspect immediately. filing a civil fraud lawsuit. i thought we did this. >> they lost. prosecution lost that one. >> against jpmorgan over mortgage backed securities packed and sold by bear stearns. the action first to come out of a work group created by president obama to go after wrongdoing. jpmorgan bought bear stearns for $10 a share in march of '08 and we kind of thought they were doing the rest of us a favor. now they're like, thank you, sir, may i have another. the bank says it will contest the allegation. similar cases against other banks are likely to follow. scott cohn has been reading through the complaint as he always does. he'll have more at the top of the hour. and samsung will be allowed to sell its gallaxy it tablet in te united states. a court is removing a temporary sales ban on the twice. and samsung has filed a motion against apple saying that iphone 5 infringed on some of its patents. >> tit for tat. >> exactly. and boeing -- some words are for cable. i'd say probably -- >> tit for tat, there's nothing wrong with that. >> if you comfortable saying that. >> i am. >> you know how they cut everything romney says, they cut out all the stuff on both sides of it? all we'll have for you is saying it tit, tit. remember faber, remember what he said? >> yes. the work on his finger. and you let him -- >> no, he stopped right after -- >> he stopped right after you said you what? >> yeah, anyway, boeing engineers and technical workers -- >> who did we have on last week who had a fluffer? >> a fluff off line of clothes. >> right, lululemon. >> is it not lululemon? >> in france it is. >> yeah, it is. what's happening here? the workers are voting to reject the pay offer from boeing. talks are set to resume today. a separate vote is required to authorize a strike so it doesn't necessarily mean it will happen. most experts say at this point that a strike is unlikely. >> we have another stock to mention this morning and that's google. shares hitting an all-time high yesterday after the search engine giant's stock at this point is now the second largest on the nasdaq 100 index. of course apple the biggest. it topped microsoft's market cap earlier in the session. google has soared more than 15% year to date. >> and the world's largest retail trade association saying retail sales should rise 4.1% this holiday season. that's slower growth than the past two years. the group, though, says mixed economic data and political uncertainty are weighing on consumers. national retail federation president matt shay. >> we're confident that if the congress and the administration would resolve these issues, that this 4.1% projection would actually be quite a bit higher. >> as for the impact on the labor market, the number of seasonal workers expected to be higher this holiday season comparable to the 607,000 hired last year. >> did you see macy's put out a press he release yesterday, i think they're hiring about 2,000 more people. >> but that's temporary or that's -- >> for the seasonal workers. >> you get that, too? >> i wrote him back. terry lundgren sent out a press release. i said why don't cow 't you comd talk about this. >> i said what about the parade this year. >> he it write back that he loves us, but he's not coming on. >> for a retailer, wouldn't you -- i'd like for a guy like that. really. i don't think i'd interview him. just send pictures. >> he spent a long team working his way through federateded. >> i know he has all this background. >> not even retail. just any ceo. >> this will get a little sickening, but he looks like before the super hero in a comic book, he looks like the guy that the super hero is before he becomes -- if you look at him, they look like that. they he got the eyes and the sharp features. look at any comic book. anyway, he's blushing somewhere. he hates when people talk about him. let's check on the markets this morning. futures 5u7 s up 51 points. we got 77 yesterday. hard to understand. things in europe again, we follow every headline. and we think things are good when they tell us something is happy. and then we seem to sell it when it's bad. i don't know. spain going to ask for a bailout in all the same stuff swirling a away and what we're really keying off of is $40 billion a month right now. >> around the world. >> and remember how many people said when we do it, sooner or later everybody else will follow. so australia today is getting more accommodative. and the central banks around the world in a slowing global economy are going to open up. we'll see where it all plays out, whether all current cities are suddenly represented in oil and gold, suddenly gold and oil are so high that any gains that you get in your market averages are -- >> and yet crude oil back at -- >> 92, yeah. expressed in either euros or dollar, it's expensive. the ten year note which we know is just able to trade wherever it wants and not being influenced at all by the fed, just at a 1.63%. look at the dollar which has been around 1.28 versus the euro. 1.29 today. and then gold was at a session high, i think it was at a euro all-time high yesterday. down a little bit today. >> right now time for the global markets report. ross westgate is standing by. while you -- >> two days now? >> guess who we get onset with us. >> mr. poulter. that's fantastic. and is that the first interview he's done outside of the event? >> he may have just talked after the event, i guess, and i know he had a few guinnesss after the event. i saw a few pictures yesterday. but he had those same eyes. eyes scare me a little bit. i'm not going to be that nice. because he put a dagger in my heart. i'm going to talk about how well he played, but he put a dagger in our collective hearts over here. >> what do you want to ask him? >> i got a million things i want to ask. i want to ask when he really started believing. i want to ask him how much was it a euro win versus kind of a gag on this side. >> i want to know what did jose marie wlis thisper in his ear. >> he won't tell that you. >> we'll try. >> you know you got to ask.you . >> we'll try. >> you know you got to ask. >> he's not your typical rich kid golfer. are they rushing here, saying get on with the markets over there? >> no, not at all. i would talk about this all day. >> i know you would. so would i. that's the problem. i see green and red. looks like the same old crap you're going to talk about, but go ahead. >> just one thing. the interesting thing about ian, when he was younger at his golf club, they thought his brother was a much better player than he was. he's a guy that has got where he has through shear hard work and determination rather than -- he worked at it. >> you you can scan see that. that was -- i mean, saturday and sunday combined, and then with his previous ryder cups, it was like a singular, i've any nevern anything like that. with a putt, i can't even read it, and if i did, the idea that i would put the right stroke on it, but to be read it and then hit it every time. on saturday i don't think he missed a putt no matter where it was from. so i want to ask him how he does that, too. >> well, that's another great reason to keep watching the program. very excited about that. meanwhile things have turned around. we do have a little more green than red here on the stoxx 600. so advancers outpacing decliners by nearly 7:3. we it start down negative territory first thing this morning, but we've turned things around. ftse up 1.30 yesterday. here in spain, the best performer up 1.4% is where we stand. we had shall reuters report, becky talked about this a little bit earlier, that suggested spain was now pretty close asking for a bailout. there are concerns in germany that they don't want to put different bailout requests in front of the german parliament. trying to see if they can lump them all together. both sides have denied that story, but its has had the impact of brings yields further down. ten year also lower. has had tht of brings yields further down. ten year also lower. returns of around about 20%. so good performance from italy, as well. as far as currency markets, reserve bank of australia cut rates by 25 basis points. weaker against the u.s. dollar. citing chinese demand slowing and of course the impact of that on their commodities markets, as well. jim o'neill was in with me this morning again talking about the shift in china from quantity to quality which he thought actually would damage australia more and benefit somewhere like mexico, as well. so he has a trade on of short u.s. dollar, long mexico peso. back to you. >> all right, ross. stay tuned. 6:45. is it five hours -- i don't know. all right. >> half an hour. >> yeah, it's in a half hour. but don't you have to add five hours to that? no? coming up, take's weath etoday' of forecast and our squawk sports report. in person early voting begins today, but you tonight hayou do to prove it's you. who would ask for an i.d.? that's ridiculous. ohio joins 30 other states. and john harwood joins us to talk 308 ticks next. [ male announcer ] for the dreamers... and those well grounded. for what's around this corner... and the next. there's cash flow options from pnc. solutions to help businesses like yours accelerate receivables, manage payments, and help ensure access to credit. because we know how important cash flow is to reaching your goals. pnc bank. for the achiever in you. zagat just gave hertz its top rating in 15 categories, including best overall car rental. so elevate your next car rental experience with the best. it's just another way you'll be traveling at the speed of hertz. >>> let's start with monday night football. although monday night football seems -- i don't watch it compared to sunday night football. but anyway, the chicago bears beating the dallas cowbokou boc 34-18. tony romo matching his career-high with five interceptions. way to go. in baseball news, washington nationaling clinched the national league eastern division title last night.sing clinched national league eastern division title last night.ng clinched th national league eastern division title last night.g clinched thel league eastern division title last night. clinched the nation league eastern division title last night. their first division title since moving to washington from where, andrew? the nationals are now trying to earn home field advantage throughout the playoffs by having the best record in the league. they are battling the cincinnati reds for that honor. and a programming note, ian poulter will join us in studio at 6:45 eastern. and he may show me how to fix my hair. i hate that song. now that i've had a day or two to deal with it, i loved it, i loved every minute of it. i don't like the europeans. i don't like them. but i love him. >> he made it all happen. >> he did. took it completely on his shoulders. no way they win this without poulter. so this will be cool to talk to him. and we'll make up some business angle to justify the time we spend on it. >>. so sore, right? >> he has a clothing line. he's a partner in sports yapper where it's a twitter thing when you're watching. >> is ehe a net jets guy? >> he has the marquee on his shirt. >> just 25 minutes away. >> there's marquee jet guys, there's zip car guys. you're a zip car guy. unfortunately, we both are. >> jeeves is not a zip car. >> jeeves is a figment of his imagination. it's a stick. he has no helicopter. he has no skreefjeeves. >> you're not supposed to tell people that. >> that's why occupy wall street targets you because of jeeves and helicopter. >> the occupy -- >> occupy wall street, yeah. minute you bring that up, he gets nervous because they don't like you. sbl let >> let's get to today's national weather forecast. alex, good morning. >> things getting a little wet in parts of the east. in fact the same system impanningiimpac impacting us in the south is starting to move that direction. here it is on the radar showing up across the mid-atlantic in the general motion will be taking it way on into the northeast. boston one of those areas that will stay dry for most of the day, but new york city, d.c., philadelphia, those areas in and out of the rain. we're seeing more here across the carolinas. also down into florida. quite a bit of moisture streaming on through. so rain gear certainly necessary in a lot of these areas across the sunshine state. and again it's all thanks to this storm system that will be in place for the day. the potential is also going to be there thanks to the system for severe storms. and we'll be watching that area in the red from the upper ohio valley all the way down on into northeastern florida. heavy rain a threat, but we could also see damaging winds and can't rule out that risk for tornado either. meanwhile, we flip the script and talk about wintry weather. wednesday, could be talking snow showers in montana and potential is there for accumulating snow. a couple inches. so starting to see some of the signs of late fall and even winter out there. but before that happens, we've got some rather warm air to deal with out ahead of the main front that will bring us some of that snow. once that moves on by, look at how the temperatures respond. bismarck, 50 degrees there out ahead of the front, 84. but all those areas will be chilling down. by the end of the week, we'll be seeing temperatures for highs like we haven't seen since april. so big chill on the way for the middle of the country. >> thank you, alex. now on to politics. john harwood joins us from new york. not d.c. this morning. good morning, john. it appears to me, and maybe i'm wrong, but this election is now increasingly far from over if it was ever over at all before. i'm looking at a cnn report, also nate silver saying new polls raise chance of an electoral college tie. what do you know? >> i had no idea what nate's talking about. t it is possible that we could have an electoral tie. highly unlikely. so i don't think the election's over. b obama has the lead. we still have a month to go. the next two weeks with three presidential, one vice presidential debates, we have a chance for mitt romney to set a different impression with the american people than he's been able to do so far. who knows what president obama will do and what events are happening in the world. but i'm not sure other than some tightening from a little surge that obama had which i think is receding a little bit, i'm not sure what nate is talking about. >> john, you wrote a column that talks about the debates and the impact of the debates traditionally. and made the case that traditionally it makes very little impact. >> there are many individual moments that make an impression. but to fundamentally change where a race is going is very rare and you need a combination of events. the example that i used in that piece, andrew, was 2000, al gore had a lead of about what president obama has now entering the debates against george w. bush. he had a reputation as a strong debater. his body language was off, he was condescending to bush. bush was surprisingly well performed and personable. you had the bush campaign take advantage of some mistakes that gore made in the debate. and they really drove a story. cheney beat lieberman in the vice presidential debates. all those things came together and political scientists call it a wave effect. cause out with bush ahead a few points. >> couldn't you just say for an idiot, he was surprisingly well inform informed in say what you're feeling. >> i've never thought bush was an idiot. >> why would you say surprisingly well informed? he was governor for -- he had a higher grade point average than al gore. >> because bush had a reputation -- >> with who? >> among people who cover him and among-mf. >> the media, you mean? >> a significant portion of the american people. >> i'm playing with you. i read what you tweeted, that you're ready for some debating with morning joe and at squawk. so you know this is fun, this what -- and i know exactly what you're saying. >> i want the record to be clear, i never questioned whether bush was smart enough to be president. but -- >> a lot of people misunderestimated him and his ext staregiery p i was going to talk to you about whether anyone still cares about cayman islands. the "new york times" decided to spend a lot of time -- not really looking at benghazi or libya too closely or fast and furious, but they found more stuff that he's done under the law to maximize profits and minimize taxes. they got him ted dead to rights again. i don't know if any american cares. do you remember how the kennedys made their money? >> i think there was some boot legging. >> might have been a little boot legging. john kerry married and then left his yacht in providence or something, didn't he. and then john edwards flipping his magnetic business card at all the ambulances going by made $80 million. it's weird, isn't it? >> he was a good lawyer. >> and a hell of a human being, too, johnny. we have ten seconds. >> i don't think additional incremental disclosures about offshore investments will make a big deal. >> all right, my friend, thank you. >>> when we come back, we'll get to kevin ferry from the cme, we'll find out what's most likely to drive action on the second day of the quarter. smart comes with 8 airbags, 3 a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. monarch of marketing analysis. with the ability to improve roi through seo all by cob. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. i'm going b-i-g. 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[ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. ♪ >>> i was thinking about a reference to caddie shack with poulter. during the movie, he had a p putter that einstein had designed this thing where you just put the putter next to the ball and press a button and it hits all of it. that looked like poulter had one of those. >> do you you carry around one of those big bags? >> good morning. welcome back to "squawk box" here on cnbc.those big bags? >> good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. our news maker, i think he might be in the house. ian poulter heart and soul of europe's team. most teams with 12 guys would have one heart, one soul. but he was both. rory was phenomenal and justin rose. but we'll talk to him about numerous business ventures and i don't know if he's had 48 hours to think about it yet, but he's had time to think about what he did. and wasn't happy with what he did. but at 6:45, we'll talk to him about that. i think do you know what he likes to do, he likes to beat the fans here, too, because they give him endless grief. >> sounds like somebody who has overcome adversity time and time again. >> the more people say stuff to him -- you know what, those fans in europe are complete jerks, too. >> as opposed to the fans here? >> they're both jerks. we don't kill people at soccer matches at least. >> no, we do that after basketball games here. "usa today," the cover story is about an intentional 727 crash. discovery did this for one of their programs. they crashed it into the desert to see what happened. which is amazing because you want to find out who can survive these things. what is more unsettling is they talk about who survived the test crash. they say that passengers in first class would have died. >> always. you want to be over the wings. >> middle of the cabin might have suffered concussions and broken ankle, but those in the rear would have walked away. >> if i were to ask when the last time a big airline went down -- >> this was based on two big airline crashes. >> the last time it went down in this country, it would be the wrong question to ask because i don't ask questions like that. i take it back. but unconsciously think about the last time we had one of those. with 50,000 takeoff and landings every day, we're sitting here, we're in much greater danger one of these lights will hit you right on the head. >> when i go on a plane, i go on the seat guru and try to figure out which is the exit row over the wings. >> you'll try and survive the -- >> i try. >> but this is what discovery does. they find stuff like this and like shark week and it's all of our fears. and i know the odds are not great, but we watch. >> since we're on the topic of planes crashing or not crashing, did you see the youtube video of the guy, the pilot who takes his h -- trying to get engaged to his girlfriend. but what do you call it when you propose, he's proposing. so he's in a private plane and he says he's going to crash and it's being videotaped and it looks like they're going down and he tells her to go through the checklist of things to do. >> did she say no? >> no, she said yes. it is a remarkable video. >> no and i'd hit him and go find somebody else. that's a stupid -- >> that's a terrible thing to do. >> i believe he was a professional pilot. anyway -- >> okay. before we get to everything else we've been talking about this morning, we want to focus on the markets, as well. kevin ferry joins us from the cme. and we've been watching qe-3 very closely. i know you have, too. is that why you think we've seen so many green arrows recently? >> yeah, sure. i think that it's helped. the main thing is it's been extremely well advertised. so get a lot of criticism and a lot of talk, but we have to stay focused on what's working in the market and what isn't. so the one thing that we've seen both on the last day of the month and depend yesterday, though, becky, in the middle of session especially the nasdaq, market seemed to lose the air from underneath it. so although that was kind of sketchy, we're encouraged by the fact that it was both instances the market found a bid and has been able to respond positively to it. >> what do you think's happening? >> well, i think that it's just more of the same and all over the world. so yyou saw australian currency down a little bit. yesterday you heard the japanese talk about getting back into qe by buying other people's bonds. that's an interesting play. they should get on that if they're going to to it. helps move their currency. they could move on the inside of twist over here.o it. helps move their currency. they could move on the inside of twist over here.do it. helps move their currency. they could move on the inside of twist over here. too many people are getting caught out of the market by trying to make value judgments about what the central banks are doing. you have to just recognize that they're committed to doing them and then move your money where you think you can make a profit. >> but is it fair to say, we had jim chanos on the program and his point was all the quantitative easing is starting to mask what the market would normally be showing us about strengths and weaknesses with companies. is that the case? >> you bet. and the distortion is the key factor going on down the road. but again, this is something i was thinking about yesterday as the evans interview came around. and it was evident when you talked to plosser, these guys are writing off 2013. the first years they start talking about are '14 and '15. for the rest of us, we have to live them. so i think that the road can get a little sketchy. but they're clearly talking about holding down volatility and hoping nothing happens about so that that's where the fun starts. but in the meantime, you can't just disregard what's working positively. and i think that your tweet this morning was what got me looking at it with regard to krugman's piece and something to do with the deficit, is that going to be spun positively if they're working on it or more fearmongering that something really heinous will go down. >> okay. so keep sticking with what's working for now. we'll keep an eye on this. but kevin, thank you. you always keep us up-to-date on everything happening down there. >> one more quick thing i'll say. watch silver. a lot of popularity in it. we didn't get an outright sell signal, but we got very bearish divergences for silver when it made a new high yesterday. trading over $41 on ebay for silver coins. well over the price in the marketplace. so watch out for that. could be an actionable trade. >> okay, kevin. thanks for the tip. >>> if you have any questions, comments about anything you see here, squawk@cnbc.com. coming up, the chicago teachers strike back in the headlines this morning. we'll find out why next. and then ian poulter's in the building. attention golf fans ever where. >> look at that. every player's name. unbelievable. >> got to be careful. >> i don't want to lose if because it's mine. >>> welcome back. the chicago teachers strike ended weeks ago, but not officially. today members of the teachers union will actually begin voting on that tentative contract approved back in september. completed ballots aree picked u tomorrow. the chicago public schools expects the new contract will be ratified at a meeting on october 24th. >> a lot of people are tweeting about this. still to come on "squawk box" we'll hunt for value with legendary investor sam zell. i can't wait to talk politics also with him. i hope you had some coffee, andrew. >> i had coffee. >> he's pretty outspoken. you know where he's from, too. he knows how things work in chicago. first, though, the man of the hour, we will welcome ian poulter to the set. 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[ male announcer ] the endlessly customizable 2013 smart. >>> hero of the ryder cup ended with a perfect 4-0 record. heart and soul. needs to be a statue. ian poulter is hear as you saw. thank you so much for coming this. >> thank you for having me on. >> there's no hyperbole to -- and i've said this. i'm not just going to kiss your butt because you hurt me very badly and you hurt a lot of american fans very badly. >> thank you. >> how many guinnesses after the match? >> there was a lot of alcohol consumed in that team room sunday night as you can imagine. the champagne was flowing on that bridge as you all saw and i think a few guys took a little bit too much of that down before that press conference. but it was good fun nevertheless. >> what is it looking back, what is it about the ryder cup that does this to you? >> i just love it. it's the purest form of golf. no money involved. this is pure pride and passion. >> but it's our continent. you don't care about germany. you don't care about -- you probably don't even like germany. >> it's that whole trophy. >> you like beating americans. >> it's pride and passion. how can you you not go out there and give it your all. that trophy's meant a lot to so many people over the years. to have seve, just meant so much, you know. what that's done for the game of golf globally is pretty special. and i think for ollie to have seve on the left sleeve sunday was very special. it's meant an awful lot. >> the hair on my neck is standing up again thinking about it. if the olympics -- i can't even imagine that the olympics if you were playing for the uk in 2016, i can't imagine that that would be -- would it be similar, do you think? >> i don't know. but that will be the first time we've ever played golf in the olympics. i'm not sure how that's going to feel. a lot of history in the ryder cup and that's with a creates the drama, the excitement and the buzz and everything about it. >> wouldn't trade it for anything else. >> i haven't won a major. everyone keeps saying about winning a major. to me, the ryder cup has been my majors. and i haven't won a major. but i wouldn't trade my memories and my time in the rye it tder right now for anything. >> recently it was a friday or saturday at one of the majors where i was thinking about betting on you. and i've seen the look and you were leading, i think, either after the second day or -- >> it was on sunday. sunday the p xwchlt a, i had a little run there. rory was leading. comfortably. and i had a run of six birdies in a row on the front nine. >> somebody wrote in and asked if you you practice those. >> i don't know where they come from, but they're pretty scary. he scares my kids let alone anyone else's kids. >> i was watching and i'll admit this, i was watching on sunday and i was hoping that you guys kept it close and made a match of it, but i never really believed it. and i watched it in sickening slow motion train wreck as it sort of happened. but when did you think it was possible? you say on saturday? >> it was a train wreck. i have to be honest, you look at the board as it was panning out saturday, at one stage we were 10-4 down. that's 10-4. we were six points behind until sergio and luke managed to win their match. and they were up early and up a lot and the americans come back at them. and we managed to win that point. and that gave us the chance at the back of the field there to turn that match around. and we knew if we could somehow get in at 10-6, it wasn't like we were we were that far behind. brookline, 1999, they've done it to us. >> that's what i was going to say. >> this will be replayed for the next 50 years and it's going to be you and those crazy odds. >> it's one team. >> i know but you know on saturday, do you have statistics how many putts you hit on 20 feet or less? >> i don't know, but -- >> did you miss any on saturday? >> not many. >> i saw one from on the fringe, i didn't think there was any way you were going to make it, you had to play it almost past the hole. you hit it hard, i was going that's sick. you had already hit about ten, now what percentage of it was you guys winning and what percentage was it the u.s. losing? i'll tell you this, justin rose, 17 and 18, that won it. >> huge. >> luke donald kicking butt of the guy who was hot on our squad, rory coming late and still winning. i admit furyk and stricker, but i think they, even with everything you did, if furyk made that putt you would have lost. >> everything had to be aligned. it was crazy. it was those first four matches were key and that's why the order got put out the way we did. we had to put blue on the board early. we had to silence the fans. we were getting it hard. >> what was the worst thing you heard? >> they're chicago fans. they're passionate. >> your guys are even worse, just as bad and the ole, ole, ole. >> stuck in my head, i've been sing something for days. >> the best sound. >> the rivalry and the spectacle it was great. >> it's passion, i've never experienced anything else like it. >> ian what is it like being in the team rooms and the sense of camaraderie, does it last or is it gone in. >> it lasts a lifetime. the memories we get as a team, olazabal said it best, ryder cup is special, memories last a lifetime, moments like that mean an awful lot and that's why europeans have done unbelievably well. we embrace together. >> you hang together when you win. i'm sure the u.s. guys just went home. >> in hindsight i'm starting to question some of davis love's moves and i don't know whether other people, i might have started instead of putting tiger and stricker at the end i might have let the experienced guys, maybe that was their time to lead. >> you can't screw up that. davis has done a great job. look at the pairings earlier in the week. they outplayed us. we were played off the park. this wasn't supposed to happen. >> could davis have said anything to anyone on sunday, done anything different in. >> the mistake he may have made was he didn't really believe it made any difference in how he sent out his pairings on sunday. he put them out to play golf, just needed 4 1/2 points. the guys are on electric form, let them go and play golf. didn't pan out. we had strength in the front. >> luke donald, have you ever seen luke play like that? >> he was well number one. >> yes. >> the guy is clutch. >> hit every approach shot five feet from the hole and sunk every putt. >> it was incredible, i love it. >> we promised to talk something else. >> sponsors, how many calls did you get in the past 48 hours? >> twitter has blown up, i can't read them quick enough to respond to it. it's insane. it's really nice to get that kind of a response from everybody globally watched this ryder cup and watched history. >> you wear crazy clothes and pink colors. you had a clothing line for a while. >> i've still got it. ijpdesign.com. >> can you tell us any -- your revenue are going to, the revenues at ijp.com are going to go up. >> it's a young business, had it five and a half years. i've been passionate about my clothes and wanting to look good on the golf course. we are doing very well and hopefully we'll grow our small business to a big business. >> has there been an explosion in. >> it's been a day and a half, but -- >> the web traffic coming in. >> the web traffic i'm sure will go up. >> and with teixeira, you have sport schapper. >> it's like a twitter forum for sports where everybody can talk about whatever sport it is they're following, whatever game they're watching live, they can discuss it, they can interact with everybody and that's great. sports fans are sports fans and they want to discuss and want to talk about all different kinds of sports and what's happening, what's going on. >> did you watch a replay of the whole, of the match? >> i haven't had two minutes to sit down. >> tiger still has it at times. you saw a couple of times, glimpses now? >> tiger is tiger. tiger can hit the best golf shots you've ever seen at any given moment. he's incredible still and that's why he's the biggest man in golf. >> and he will continue to win majors. >> he will continue. >> because it seems somewhat -- i've never sold him short, else' my favorite athlete, mentally, well, now i don't know but he's so mentally tough and i would never short tiger. >> he will win more majors for sure. >> you will win more majors. >> if it doesn't happen i'm not bothered but i want to work real hard. >> you don't need to now because you appeared on bx bx "squawk b" congratulations, ian. i hear from jack welch and everyone, even though we lost, nothing like any of us have ever seen. >> plus singing "ole, ole, ole." >> thank you. >>> when we come back, we have sam zell unveiling where he sees opportunities right now. stick around. we'll be right back. 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>> let's see, andrew, thank you. new york's attorney general seeking billions of dollars in damages from. morgan chase for alleged fraud that the beat stearns that would have occurred long before jp took over bear. cnbc has learned the case could be a wave in the future for perhaps other stuff. senior correspondent scott cohn is here. if i were jpmorgan i'd say eric, bear stearns it's yours. we thought we were doing the financial system a favor, you go ahead and take care of it. >> it's one of the things that jpmorgan got when they got bear stearns. >> yes. >> it wasn't initially their choice but now they pick up this and for those demanding someone on wall street pay for the financial crisis well this may be the way they get their pound of flesh according to sources close to the case because there could be more lawsuits where this came from, the first problem of a mortgage securities fraud working group including federal prosecutors and attorney general announced by president obama in january. >> this new unit will hold accountable those who broke the law, speed assistance to homeowners and help turn the page for an era of recklessness that hurt so many americans. >> bear stearns did almost no due diligence on the underlying mortgages while claiming to investors it did and the housing bubble burst and you know the rest. prosecutors have had almost no luck making criminal charges stick and the effort lost steam in 2009 when two bear stearns fund managers were acquitted on criminal charges. since then there's been little incentive for wall street execs to cooperate with prosecutors. according to a federal official, more than a dozen federal prosecutors and civil attorneys helped develop the case which new york attorney general eric schneiderman is bringing under the state's powerful martin act and that collaboration is potentially a model for future cases but won't say when the cases are coming or who they might be filed against. will it work? jpmorgan says it will fight the suit which involves conduct at bear stearns long before it was acquired by jpmorgan, over a weekend at the berehest of the federal government. jp is cooperating with the government group and if this lawsuit works it may have some power and fuel. >> can i ask a cynical question? i looked through the lawsuit and looks like so much of the plaintiff lawsuits. >> sure does. >> plaintiff attorneys brought the exact same civil case. >> right. >> why do we think this is going to be a new model for anything? >> they say it's a model for the feds and the state attorneys general to work together. new york has this martin act that other attorneys generally in new york have used quite a bit in the past. >> to the extent that they bring more cases like this, civil cases, do you think this does anything to feed the public's lust for whatever you think, whatever you think president obama was trying to go for a year ago when he created this group in. >> if the public is lusting for ceos being perp walked over the financial crieses they're not going to get it with this and may not ever because they haven't been able to build the criminal cases, they're tough to make, if there was criminal conduct you have to get the lower executives to plead or cooperate. >> is there anything to indicate there are criminal cases that could come from these things in. >> this doesn't read like a criminal case. it reads like a civil case, like a lot of the plaintiffs' cases. rather than focus on a specific deal like the sec suit against goldman sachs it talks about sort of a broad range of conduct, where we know these banks were churning out these mortgage-backed securities and based on this, doing this without a lot of care. >> is it harder and harder the longer we get from all of these actions? >> we're getting to the five-year statute of limitations on securities fraud, they're running up against that and you have the pressure of election time, presumably whether the administration changes or the administration and the justice department changes, people want to get things done so they're running up against that sort of -- >> turnover even within some of the departments. >> exactly. >> scott cohn thanks for that report. >>> let's talk about other headlines including a court victory for samsung over apple. the judge overseeing the patent dispute lifted a sales ban on samsung's tablet computer after a jury found the product didn't infringe on apple's patent. the galaxy 10.1 an older model but the lifting of the ban could help samsung in the run-up to the holiday shopping season. samsung filed a motion against apple saying the iphone 5 infringed on some of its patents. they vie for smartphone market domination. last year apple sued samsung in multiple countries and samsung countersued. >>> it is october, we're think being the holidays. americans are expected to spend more during the busiest shopping season of the year but they are also at the same time displaying more caution. the national retail federation says it is expecting sales during the winter holiday season to rise 4.1% this year, more than a percentage point lower than the growth in each of the last two years and it would be the smallest increase we've seen since 2009. the crash came up, people spent less in 2008 and spent more off of that relative basis. retailers depend on the last two months of the year for up to 40% of annual sales and the nrf is predicting merchants to hire between 585,000 and 625,000 holiday season workers. >>> boeing engineers and technical workers rejected a four-year contract offer. they'll return to the bargaining table today to strike a new labor agreement for 23,000 workers. the union and boeing agreed beforehand to resume talks today if the proposed pact was voted down, the current labor agreement expires october 6 so they're still talking and it doesn't mean it's going to be a strike, it means they're going to keep talking. some people say a strike is unlikely. we'll see. andrew? >> coming up next we'll welcome our guest host for the remainder of the program, sam zell. and bottom of the hour it's trump time, the donald, donald trump sharing his thoughts on housing, politics and of course the ryder cup. "squawk box" is back with sam zell after this very short break. >>> comments? questions? send them to at squa@at@squawkc. >>> welcome back to "squawk box" this morning. checking futures, green arrows. dow would open 54 points higher, nasdaq a little over 14 and s&p 500 up as well. >>> for the next two hours we are joined by one of the top real estate investors in the world. we are lucky enough to have sam zell, the chairman and co-founder of equity group investments here on set. thank you for coming in today. >> my pleasure, it's fun. >> nobody knows real estate like you do. we've been watching a lot of different things play out in this space. you were talking with joe off camera about qe3 and what you think about the fed's latest move. how does that shake things up in the real estate world? what does it mean for investing on the commercial and residential side? >> the best answer i'd give you is that we were beginning to see the excess flow of capital, we're seeing too much capital chasing too few opportunities and consequently i think number one the effect of qe3 is nothing more than pushing up the stock market and yet the stock market is being pushed up at record levels of limited trading. we have low volumes and the market goes up, which is manipulation but it's a function of the fact, what's anybody going to do with money and nobody has any confidence in the future, so you limit your money to liquid. procter & gamble, anything that has a dividend is basically jumped for because there are no other alternatives. look at your capital numbers last week. nobody wants to make commitments beyond tomorrow. we run a company that does a lot of corporate enterprise installations and one of their triggers is when the enterprise projects start getting delayed, we're heading for a recession, and that's exactly what you're looking at right now. you're looking at capital expenditures across the board being deferred and being deferred for a very good reason. they have no confidence. there's nothing that's going on now, qe3 or nlrb, that ain't building confidence. >> did they have any certainty when election comes? >> i think the answer is the certainty of the election is that it will be over. which ever guy wins is going to have to do an enormous amount of stuff very immediately and very hard and based op. all of the other stuff we're looking at it's hard not to assume we're on the cusp of going back in a recession. >> that's frightening. >> well it's, the word frightening is too strong. the reality is that business is all about cycles. we did through positive and negative cycles and the opportunity for us is to take advantage of a positive cycles, so mitigate the negative cycles. what we've just come through is four years of a positive cycle that has been limited dramatically by political action. that's scary and that's not what's supposed to happen. >> we didn't get the bounce back that we were -- >> well, we created so many headwinds. we created so many issues and the environmental protection agency and you'd think on what it does t isn't part of america's education. >> nobody, no president, not me, not any other president could have done any better over the last four years, given what he was handed in this, when you heard bill clinton say that, bill clinton has not said that before. >> i could have done better. you could have done better. i think anybody who wasn't ideologically driven could have done better. >> what would you have done? >> sorry? >> the meaningful steps. >> what wouldn't you have done. >> we need jobs so therefore -- and we need exports so therefore the first thing you do is have the nlrb attack the number one exporter in the country on really preposterous grounds, then you in effect start yelling at business and threatening business and then you get on the tv and talk about las vegas and all of a sudden the hotel business dies. i mean, the answer is that we need leadership, not criticism. we need encouragement not discouragement and until that scenario changes i think the united states is quote/unquote, i hate to use this word, in a malaise. >> is that a function of new laws and legislation or a function of rhetoric? >> first of all it's both, okay, in other words, we hope that it's new laws. the reality is, it isn't new laws. it's using the executive branch to legislate by fear or by threat. you don't need a law. in effect the epa is doing stuff all over the place. the nlra is doing stuff that's not sanctioned by any law. it's a political decision and it's extraordinarily negative to our country and our economy. >> "the journal" did you read the lead editorial today how razor thin the obama care vote really was. we know scott brown they had to do reconciliation after he won. gym webb fairly won, al franken sort of harvested the boats to beat norm coleman. those made a difference. evan bayh and jim weber saying we wish we hadn't taken 20% of the economy with no republican votes and legislated the most unpopular bill in history that's still unpopular and really poisoned the whole political atmosphere, at the same time you weren't trying to add jobs. it was almost an impediment to adding jobs. >> using reconciliation process on prapts the most important piece of legislation in the last 20 years, it is basically contrary to what america was built on, america was built on consensus. america was built on getting people on board, and legislating accordingly, not in effect using a mickey mouse process to pass a staggering bill that nobody who voted for it had ever read. is this the way you run a country? >> i guess chuck, our friend, pushed jim webb on, wish he hasn't voted for it. no, but even getting him to admit and evan bayh. >> he said he wouldn't? >> he didn't say he wouldn't, they both have great regrets about the way it was handled and that's what got me about, and i think a lot of -- the country just listening to bill clinton and nodding. you could see the approval ratings go up and that maybe we're not such, maybe he couldn't have done anything and all of a sudden one speech from clinton suddenly we're not at 8.1% unemployment for 43 months? >> come on. the reality is that bill clinton was a politician. what we need in this country is a politician. hard as it is to say that. >> somebody to work with both sides. >> in effect who says my objective is this. now who do i have to corral to get from here to there. that's called leadership. we know the stimulus bill is just sent down to nancy pelosi and she wrote it. president had no input. dodd-frank same thing, obama care similar. there's this cadre of people writing the laws of our country without input from at least half the country. >> what's the most important thing you think needs to be tackled head on. you think the fiscal cliff is the first issue? >> there are a multiple of issues that have to be acted on and obviously the fiscal cliff is a very important one. the trouble is the fiscal cliff is probably too easy to solve and kick down the road, and so therefore i doubt we would be in the fiscal cliff. i'm not sure, to be honest with you, that a fiscal cliff falling off the edge is not exactly what america needs. >> is this a wake-up call do you think at this point? it's a pretty severe wake-up call to get. >> you're describing a wake-up call to rip van winkle. how many years have we been kicking the khan down the road. that's a wake-up call for rip van winkle, somebody who has been sleeping for a multitude of years. >> you're suggesting play with fire a little bit? >> i'm suggesting that i'm interested in solving the problem and have you ever solved a problem without playing with fire? have you ever solved a problem without going to the edge? have you ever solved a problem with fear and uncertainty? i certainly have. i do that every day. that's called taking risks. you assess risk and reward. that's how our system is predicated on, that's what built america and we have to look at every option with that in mind. we've tried everything under the sun and every solution has kept kicking the can down the road. ersk erskine-bowles, it's inconceivable that wasn't endorsed by the president who in fact created the entity in the first place. so people keep playing games but the reality is time is running out. and if kicking the can down the road doesn't solve the problem, maybe you've got to do something else, and maybe the only way you can convince the american people that we really have a problem is to create one. >> we're going to talk more about this in a moment. we did have some people who were here earlier this week with some thoughts on simpson-bowles if there's a way to bring it back. would you be in favor of that in. >> i think that's too broad a question. there are obvious elements of erskine-bowles that are terrific and basically represent compromise, to say the whole enchilada is -- >> that's the problem if you pick it apart bit by bit what you like and what you don't. >> go back to our friend bill clinton, what was he so good at? >> getting both sides together. >> he got his rear end handed to him in the election. what did he do? he responded. what did president obama do? he went further to the left. so are you listening to me, american people, or are you ideologically driven, so that you in effect hear nothing. that's the $64 question or maybe $64 billion question. >> brilliant. >> we're going to talk more about this with sam zell, our guest for the rest of the program. when we come back donald trump will be joining us on the "squawk" u.s. in line, we have politics and business colliding in just minutes. stick around. 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[ male announcer ] the endlessly customizable 2013 smart. >>> if you've got comments, questions, anything you see here on "squawk," shoot us an e-mail squawk aptat msnbc.com and follow us on twitter twitter, @squawkcnbc is the handle. when we return donald trump on the u.s. in line will talk about the debates, presidential race and then bill ackman of pershing square will talk about his big investment call on general growth properties and what he wants to change at procter & gamb gamble. so anyway, i've been to a lot of places. you know, i've helped a lot of people save a lot of money. but today...( sfx: loud noise of large metal object hitting the ground) things have been a little strange. (sfx: sound of piano smashing) roadrunner: meep meep. meep meep? (sfx: loud thud sound) what a strange place. geico®. fifteen minutes could save you fifteen percent or more on car insurance. >>> welcome back to "squawk box." in our headline this is morning, u.s. automakers will be out with their september sales figures today, edmonds.com estimating the overall increase of 8.8% from a year ago, and bank of america's merrill lynch unit reportedly planning a talent raid on morgan stanley's wealth management group. says many of the brokers are ready to defect for a variety of reasons including apparently a difficult computer system conversion and the problems surrounding the facebook ipo. >>> holiday season competition is ramping up. toys "r" us will offer a price match guarantee for all of the products it sells, also giving customers seven days after purchase to get a price adjustment if they find a competitor selling the item for less. one key exclusion, it won't match online offers from competitors. >>> two of the nfl's marquee teams meeting up on monday night football last night, the chicago bears defeating the dallas cowboys a score of 34-18. tony romo throwing five interceptions, helping the bears lock up their third victory of the year, and another story here, victoria's secret opening a store in cowboy stadium last night. the store featured cowboy themed gear. this is the first store to open inside a stadium. >>> we are on the eve of the first presidential debate, expectations running high. chris christie making a bold prediction. >> he'll come in wednesday night, lay out his vision for america, contrast his view and the whole race will be turned upside down come thursday morning. >> joining us on the "squawk" u.s. in linewsline, donald trum. thank you for coming on as usual and good to talk to you. have you heard you can't win on a debate but you can lose one. is there any truth to that? >> i think you can win on that also. in fact i'm supposed to be going to europe and i'm canceling the trip or postponing it because i definitely want to be watching this one. it's going to be a very, very interesting debate, and if you remember florida, mitt romney went into florida, he was not looking good, and he did two debates where he just absolutely crushed it, and it's interesting. i think mitt romney will do very well. i think the president will do very well. it will be very interesting. >> sometimes i wonder about the difference between mitt romney, the man, and mitt romney and the campaign, and his handlers, a lot of consultants around, i think, because people have said on "60 minutes" he was so, seemed so sensible and so smart. i haven't seen him around much for the past three months. >> he's going to get tough and not going to be mitt, he'll have a bad resolution. the fact is, he is a very capable guy, a very smart guy. can he be a very tough guy and he's also got heart. >> when you let the press, when you let the media, donald, define him for three or four months and you never really see him out there, i think that was -- when he's on his own and when you can hear him talk and when they can't cut, "i like to fire people" before he said that if i have an insurance company that's not doing its job, but the media takes just the snippet from the middle. >> exactly, they said all they left was the word "fire." they didn't say, "if people do a bad job" et cetera, it was terrible. he should have attacked them on that. i know him well, he's a great guy, a very capable guy, smart and he's going to do very well but the campaign has to start as of this morning. >> you've been watching the show this morning in. >> i have. >> what do you think of sam zell's comments? >> i think sam zell is great and i also think ian poulter is great. i was with them during the ryder cup, two great people, very, very different, very different hairstyles. >> different and similar, though. they call sam the grave dancer, not the bulldog but both are pretty the tenacity is there for both. >> they're both handsome men. >> and as you are as well. so i just wonder what we see in this debate, whether, should romney, you know, up to this point it's been the president's a really, really nice guy. really likeable guy and is it going to be that or is he going to, do you think he's going to start pointing to some of the last four years and some of the shortcomings for what we were hoping for? >> i think the nice guy stuff is over. he's not going to be saying that anymore. i haven't heard him say it recently. he's been attacked so viciously and very unfairly. i don't think he's going to be saying it and i think he's going to be in attack mode. it's going to be a much different mitt romney, going to be very strong and very smart and he's going to attack the president on what he can attack him on which is the economy and jobs. >> sam? >> hi, donald, good morning. >> hi, sam, how are you doing in. >> good. thank you for that wonderful comment. obviously you appreciate my hair style. >> i think it's beautiful. >> but i think the question is, how realistic is it and are all these polls we're seeing which suggests the president is turning things bluer, how true are they? how difficult is it for somebody to run against the democratic party and the newspapers at the same time? >> it's very difficult and y you look at the polls and they are doom and gloom, most of them very negative for mitt romney and that's really why he has to go in attack mode. i think you're suggesting i'm not sure the polls are correct. lot of people say the polls aren't correct. who knows but the fact is they're negative and he's got to go very strong and very smart. >> on the other hand done tald at this point in the carter/reagan deal and in the gore/bush deal, at this moment, if my memory is correctly the numbers were about the same. >> dukakis. >> a lot of movement. when you get 35 days that's an eternity in politics. one day is an eternity. so many things can happen for the better and for the worse and i've seen it and sam, you've seen it. we've all seen it where somebody's winning in a landslide and all of a sudden things happen. we've seen people have to get out because of scandal, let's assume that's not going to happen, but we've seen so many different things happen just at the end, so 35 days that's a long period of time politically speaking, a lot of things can happen, as it did with president reagan, as it did with, hey, jimmy carter was a sure winner. he wanted to run against reagan. that was his choice and they were hoping and they made a big mistake to lots of things can happen and tomorrow is day one. the debates are going to be very, very important. >> i thought you were going to ask him about -- >> "new york times" nothing on benghazi here that i can see, donald, but we got more tax stuff, cayman islands stuff. do you think the american public still cares about romney's taxes at this point? >> not too much but i think very interesting is that i read this morning where al qaeda is taking over libya, it looks like they're going to be taking over libya. we free up libya, we get rid of gadhafi, we spend our billions of dollars and lots of missiles and help people that we never met before, we don't know and hear bad things about, the rebels and now as we understand it, al qaeda, because it's so weak, al qaeda is now going in and taking over the weakened libya. unbelievable. >> donald, one last question and maybe you can react to this, today's "wall street journal" alan blinder has an op. ed and writes this, "presidential history teaches us that the abilities, character traits and attitudes it takes to succeed in business have little in common with what it takes to succeed in government, in some respects they're antithetical. i was surprised. did you get a chance to read it in. >> there's a little bit of truth. take sam zell, say sam wanted to run for office. sam, i know him well, an amazing business guy, an amazing guy but he's beaten up a lot of people over the years fairly, by the rules, he keeps winning, winning, winning. if he decides to run for office, he's got such a strong record in one way i would say a phenomenal record. somebody else would say every move he makes will be a television commercial. it's very hard for a very, very successful person to run for office. now once they're in office, i think they'd do great but it's hard to get there, in my opinion. >> the converse is that people with a lot of government experience are actually good at government. that makes sense, good at growing government and good at being part of government but i don't know -- >> the right person in that office could do wonders for this country. >> it should be about jobs. it shouldn't be about taxes. it should be about jobs, jobs, jobs. donald trump, thank you. >> so long, so long, sam. >> bye-bye now. >>> coming up next, bill ackman's big investing idea the activist fund manager joining to us discuss where he's putting his money to work plus why he's putting pressure on p&g to get rid of the company's ceo, that interview coming up after the break. [ male announcer ] for the saver, and a big first step. for the spender who needs a little help saving. for adding "& sons." for the dreamer, planning an early escape. for the mother of the bride. for whoever you are, for whatever you're trying to achieve, pnc has technology, guidance, and over 150 years of experience to help you get there. ♪ [ male announcer ] how do you turn an entrepreneur's dream... ♪ into a scooter that talks to the cloud? ♪ or make 70,000 trades a second... ♪ reach one customer at a time? ♪ how do you help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪ or turn 30-million artifacts... ♪ into a high-tech masterpiece? ♪ whatever your business challenge, dell has the technology and services to help you solve it. >>> welcome back to "squawk" this morning. our next guest saw over 1,000% in his investment in general growth partners and pushing to add new value to the price. joining us is famed active list/investor bill ackman, founder and ceo of pershing square capital management, a lot to talk about what's going on at p&g and jcp as well. on general growth you are trying to push a deal with simon properties. >> let me explain, general growth has been a good investment and we actually started off with brookfield as a partner and they've been a good partner to date. the problem is that they're pursuing their own agenda to get control of the country. >> let's set the table for a second. >> please. >> there's three companies here. there's general properties, general growth. >> mall company. >> there's simon. >> yep. >> and then there's -- >> brookfield, big shareholder. >> you're worried about brookfield taking over the company. >> correct. >> that's one of your worries. >> without paying a premium. >> and at the same time you're trying to push a deal with simon and unclear whether simon wants to buy the company. >> no, it is clear. >> it is clear? >> yes. >> even though recently they came out and said they don't want to buy the company. >> sure that's what they always say. >> the oldest story in the book, the question of price. >> it's always a question of price. >> so let me lay it out for you. board has a duty to its shareholders to protect the assets of the corporation, one of the most valuable assets of the corporation is control. sam would tell you how valuable control is. it's worth $6 billion to $9 billion, the kind of premium shareholders could receive in a sale transaction, a merger with simon. brookfield wants that control premium for themselves and they're self-interested which is perfectly legal, they own 29% of the company coming out of the bankruptcy, they now have 42% if you include warrants. 38% of the shares they can vote so getting close to a position where they can stop the company from being sold so we, what happened here is in october of last year we sat down with simon and we proposed a transaction where simon would buy the company in a merger to general growth shareholders would continue to own about a 30% interest in simon going forward, david liked the deal and he said look, but before i spend any more time, tell me whether your partners at brookfield or blackstone are interested. blackstone said sounds great to us. we began a process going on for 10 or 11 months where brookfield has been working on a deal to buy the company sore so i thought. what's really been going on working up setting up an entity called brookfield property partners and the entity will end up with their stake in ge growth and they want to keep general growth forever. if they keep it forever shareholder also miss out on their control premiums so to lay it out we asked the board in light of the situation, brookfield will get control of this company, creeping every quarter buying a little more shares we're going to be in position where the control premium will be taken away from us. we want to you protect us, form an independent committee of directors. >> i'm going to sam. what should happen? >> first of all i think you got to go back to history and history of canadian companies is all about not paying for control, not buying 100% of another company and maintaining control by loning blocks, parent company as"a" controls company " and when you stretch it out you are creating massive asset control with very little capital. now unfortunately that's exactly the business they're in. you want them to change leopard clothes or something, the idea you talk to them and you thought they were going to buy from you, i mean that's tooth fairy stuff. they weren't going to buy from you. >> sure. >> the real question i'd ask you, bill, is don't they have control today in. >> they don't. the reason why they don't have control today when we did the original deal, we did a few things, we're not permitted to vote their shares over 10% of the stock they own for their own, for the other directors, this ef they have to vote their share in proportion. we could fairly get control of their board. the second thing is they're getting closer to control with 38% but in a premium transaction structured as a tendered and exchange offer we're still fine and even if that, we had difficulty getting the votes because mechanically people didn't return their proxies there's precedent for a board granting an option to acquire to buy 20% of the stock of a company as a way to facilitate a transaction. jpmorgan buying bear stearns had trouble getting the deal done. they said we're going to sell you "x" percent of the company. there are things that can be done. we need a board to be vigilant. it will be easier if we have a willing buyer, we have and by the way -- >> what's simon's price? >> i think they'll do a deal that's economically accretive to them. >> there's got to be a number. >> we showed in a deal yesterday which would be a 30% premium to the unaffected price, get stock in simon, be $24 to the general growth shareholder versus $151 simon stock, that's the exchange ratio. because the deal is so accretive to simon, meaningful revenue synergies and cost synergies, we believe the stock would trade up significantly and the $24 would go to $29. >> is david simon going to do this? you know him. >> i think david is very good, i think there are issues here, i mean i don't understand whether there is an anti-trust issue although you could sell off stock and solve that problem but david's been embarrassed a couple of times already where he's made offers that have not been accepted and i suspect he's not about to go play a third time without a specific scenario on the other side saying if you do this, we will sell the company, i don't see him sticking his neck out again and getting him embarrassed. the minute you stick your neck out, you're saying come get me, and everybody in the world is for sure going to come get the winner. i think david will respond to an opportunity if one gets created. i'm a little more pessimistic, whether you vote 38% or you own 38%, i'm not sure it makes that big a difference. and as i found out, frankly, in a lot of other deals we've been in, there seems to be a cadre of investors who always want to preserve the status quo and i've been in situations exactly like you and they say this is so logical. obviously, and somebody comes up and says i've been there for 0 years or been there for five years, this is a great investment and i don't want anybody else to run the company. if 12% of the people decide that's what they want to do, i think brookfield has control and i actually think brookfield has semieffective or semiuneffective but semiform of control today. >> if they don't get pushed you have to get the word out. >> i agree a lot with what sam says. david was embarrassed during the bankruptcy. his mistake each time we told him what he needed to do and he wasn't willing what he needed to do. this time i'm david simon's best friend. i am going to deliver -- >> this week. >> -- i'm david simon's best friend, i'm going to deliver a transaction very attractive to simon. the way the board analyzed the transaction, they looked at as as if we're selling the company. in a transaction they own something like 30% of the combined company. we're not cashing people out. we're not looking to are a short term pop. we're merging and more levered company with less levered company with a strong management team. >> if you are going after p&g the whole company you might want to -- >> team up with -- >> you got 1% or something? i mean -- >> we're not going after p&g. >> while he's here, he should ask. >> you're trying to get rid of the ceo. >> p&g is one of the great companies of all-time, been in growth for 75 years it's stumbled over the last several years under the current ceo's leadership, and we've kind of laid out what our concerns are and i think our concerns are not our concerns. they're the concerns of all the shareholders. >> do you think your concerns are being heeded? >> absolutely. we were received at a very seriously by the board, we had a great meeting with the lead director and ken chernault and bob mcdonald and laid out our concerns. bob is focused on succeeding and keeping his job, it's a good dynamic. the board wants to give him a little bit more time and see if he can make some progress and if not, this is one of the best boards in america. >> what is the real problem? it's something built up over the years. >> part of the problem is there's not a culture of efficiency, let's put it that way at procter & gamble. it is a fat and bloated company. competitors are nimble, have better cost structures, allows them to reinvest in growth the company has not been able to. you look at unilever, making the company much more efficient. >> the '90s with dirk jagger, mick jagger, whatever, and lastly procter & gamble, you were talking about the last couple of years, p&g was turned around, sounds like we're back to the future. >> there was a problem and the board stepped in and they found someone internally, someone who has been one of the great ceos of procter & gamble. >> what is your next move if nothing happens at p&g? what cards do you have to play? >> this is the most public statement i've made about p&g. all we've done is bought some stock, sat down with the board. this is a high quality board, a group of very talented ceos, operators, not on this board to receive a director's fee. they're on the board to do the right thing and i'm confident they'll do the right thing. >> you teased in this investor conference you had a secret short position. >> yes. >> would you like to share your secret with us? >> not yet. >> can you give us a hint in. >> i'm sure it's sam's company. no. >> which one? >> what industry? >> i can't say. >> we have to go to commercial. >> i'm happy to talk about it when i'm ready. it's a good firm, as soon as the company goes out of business the country will be better off. >> i don't know what to make of that. much more from sam zell. watch "squawk" tomorrow, jim tisch, guest host, of the lowe's corporation. small in size. big on safety. [ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. ♪ >>> when we return, much more from our guest host sam zell. he's already talked about how all the signs he's following point him towards a recession right now. we're going to hear more about that. stick around form the top of the hour. by the way in just about 15 minutes we have cliff robbins, ceo of blue harbour group giving us his expert investing advice. "squawk" will be back in two minutes. [ male announcer ] you are a business pro. governor of getting it done. you know how to dance... with a deadline. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. this is awesome. [ male announcer ] yes, it is, business pro. yes, it is. go national. go like a pro. i was downstairs making coffee, and we heard it. it just came crashing through the roof, out of nowhere. what is it? it's our ira. any idea what coulda caused this? maybe. i just sorta threw a little money here, a little money there. and i loaded up on something my dentist told me was hot. yeah. ♪ >>> an investing icon talks politics, the economy and your money. >> how many years have we been kicking that can down the road and now we have a fiscal cliff and this is the wake-up call? you know, that's a wake-up call for rip van winkle. >> one more hour with guest host sam zell. >>> the activist, investor behind names like jack in the box, qdoba and chico's, we'll talk to cliff robbins about private equity, and the health of the buy and hold model. >>> the first real privatization deal in greece in recent history. the greek government is selling a state run enterprise to a private company. is this a sign of things to come or symbolic gesture? find out as the third hour of "squawk box" starts right now. ♪ >> we talk a lot about, yeah, welcome back to "squawk box" here on cnbc. that was like ten minutes about general growth. first in business worldwide. i'm joe kernen, this is the lovely and intelligent becky quick. >> thank you. >> handsome and dashing andrew ross sorkin is here. guest host billionaire sam zell, chairman of equity group investments. when i was a stockbroker i bought itel, people thought it was intel my clients were confuse. >> they did better in itel an intel. >> rusty rail cars no one was using until the economic economy so they're probably rusty again. also coming up our hunt for value theme continues, activist investing in portfolio strategy with cliff robbins, ceo of blue harbour group. i like jack in the box, qdoba and i like chico's. i don't like burger king. they can't get their fries right. >> they make great chicken sandwiches. >> they spray that smoky stuff, they actually don't bei don't like that char boiled, that faux -- >>> anyway greece making good promises to privatize state-runnent prizes. we'll talk to a ceo taking over a mall in the country's first privatization deal of the year. first becky has your top stories. >> new york attorney general is filing a civil fraud lawsuit over jpmorgan over mortgage backed securities packaged and sold by bear stearns. the action by eric schneiderman is the first to come out of a working group created by president obama to go after wrongdoing thatcrisis. this is jpmorgan of course. the bank says it will contest the allegation, similar cases against other banks are likely to follow but again something on the criminal prosecution at least did not succeed. also samsung's going to be allowed to sell its galaxy tablet 10.1 in the united states. courtroom removing a temporary sales ban on the device after a patent dispute with apple. samsung said the iphone 5 infringed on some of its patents as well so this is the back and forth between the two companies and american airlines has temporarily grounded eight planes, they're going to be evaluated after seats became loose on three different flights over the last three days. there may be an issue with the model's seat and how it fits with the tracking. it's been a hinlg issue and talked about it on "nightly news" last night. >> and bankruptcy as well. >>> u.s. equity futures we got some green arrows across the board as we look at it there, dow would open up about 53 points higher, s&p about 7 and nasdaq about 15 points higher. overseas in asia, a little bit of a mixed picture, not horrible, not so bad. i'm just looking through that and let's take a look at the european equities at this hour, the ftse up, the cac up and the dax up as well. reuters reporting spain is ready to request a rescue request as early as next weekend. german officials saying madrid should hold off, the news creating confusion among a lot of investors, so we have to keep our eyes on that one and a stock we'll be watching this morning, google. shares hitting an all-time high yesterday, the search engine giant's stock is the second largest on the nasdaq 100 index, and topped microsoft's market cap earlier in the session and google soared more than 15% year-to-date. >> i wonder where that would have put it andrew, but apple is so far ahead of google that doesn't put google above the biggest s&p 500, you know, the other, or the dow, obviously. i'm looking to see the market cap, got to be significant at this point, 250. exxon. >> a long way to get to apple range. >> our guest host this morning is sam zell, and we've been over a lot already to you. i loved hearing your business acumen. i love it when you talk politics. do you feel like it's a new normal that you've heard el erian and others at pimco say there are structural things in the job market due globalization that have us in a permanent malaise or do you think some are fixable with the right policies? >> i think all of it is fixable. i think that one of the ways you justify kicking the can down the road or not doing things is you say oh my god, it's structural. it's this, it's that. i mean, unleash the animal spirits of america. unleash the small businessmen. unleash people like me, okay? i'm a very wealthy man. i could literally put my money into the bank and play golf every day. god forbid. but i could do that. instead, i'm taking risks every day. why? why should i? if the game is being stacked against me so what this country needs is a clear, an all clear sign and all clear, let's get back to business. that's what creates jobs, let's get back to business? stop this class warfare crap, stop this politics and envy, and in effect deliver a position to the american people that says we have to drive a center, which is what we have done since the beginning of this country and what has led to its success. >> there are things you haven't done, sam, are there? you are taking risks. >> oh, sure, in this environment, i mean, you know, we're watching liquidity like a hawk because there's great sense tomorrow morning it could go the other way, in effect you don't invest as much, you don't take as much risk. >> how would you counter the argument that businesspeople and the wealthy have had their way for the past 2030-years as they've increased their lead in terms of income disparity and gotten richer and richer, and you would have hoped that some of that would have trickled down, if it works you would have hoped the average person would have participated in the good times and haven't and you need a president that is going to come in for the powerless people that aren't able to set policy and pay to go do things and you need someone that will represent them in the future. how was is that pretty damned good? >> yes, sir. >> you can take this. thank you for writing it for me. >> i'll get you a job at "the new york times." the reality is as follows. the whole focus has been on how the quote, one percenters or ten percenters, how the top earners moved ahead of everybody. is there any correlation between while they were moving ahead the rest of the government was subsidizing and subsidizing more and more people and disincent e disincentivizing them. why is it always assumed somebody doesn't succeed because he can't as opposed he doesn't want to. >> because the opportunity is not there and it's not a fair playing field which i've heard for the last two years. >> i'm sorry, i live with the playing field every day. i finance people starting new businesses, taking all kinds of risk. their motivations are the same as everybody's since the beginning of time. >> there are people who have done multiple studies on upward mobility and there's no suggestions i've heard that the reason why people have had a harder time rising through the ranks today is a function of the fact that they're disincentiv e disincentivized in the rise to the ranks. >> wait a minute, i think they are disincentivized by in effect if you don't have to pay for your health care it's another thing you don't have to worry about. >> you wouldn't make that argument about europe. >> how successful europe has been. >> it's the difference between earned success and now i'm back on the difference between earned success and learned helplessness. we're learning helplessness and learning it really well because we have a great teacher. >> all i'm saying is that, go back in history. show me any country in the world that has "progressed" successfully without engaging the animal spirits of their people, and without creating opportunity for their people to excel and push the envelope. >> i've had these toqueville quotes up, once you know you can get 50% of the vote, it's hard to, you know, it's hard to screw that up and not get reelected when it and again and again. >> you don't think there's been so many benefits, and this is why i think to the extent we talked about earlier, to the extent people looked at mitt romney's taxes there have been so many benefits built into the tax code and other things to help continue to the sort of progress at the time. >> for every step there is is an additional step on the bottom to increased the earned income, to extend unemployment insurance for 28 years. >> that is what's maybe helped at the top? >> no, i don't think there's any correlation. >> meaning the fact that we've flooded the system with so much cash -- >> andrew, the world is not a zero sum game. if i succeed, it doesn't mean that you don't. i succeed because i'm driven and i take the risks and deal with it. you succeed because you're driven similarly. and that's fine. but that's what it's ball. that's what it's always been all about. >> i don't disagree with you for one second. we have to run to a break but there is an issue of what's happened with globalization and technology, all of these things which displaced people at the lower end, so there are structural issues that i hope you agree there are some structural issues beyond welfare. >> there are structural issues all the time, okay. there isn't an extra special number of structural issues today versus yesterday. go back to teddy roosevelt and the trust buster days. there were structural issues that created that situation. there were structural issues when fdr started the new deal. there are always structural issues. the question is what are the solutions? >> sam, you've talked about the education system. >> i haven't even begun to start on that subject. i mean the idea that we instead of saying this country's standard must be the highest educational level in the world, the standard is, how do we keep the greatest number of failing teachers in place so we can be fair? well, that's not fair. if you're educating a kid from the hood and he wants to learn, and instead of getting a teacher who wants to teach you, he gets a teacher who views your job or his job as a custodian, that's not fair. that's -- what is happening at the educational level of our country, in particular in the have nots, is, you know, is racist, is unfair, it's everything you can imagine, because you're dooming these children. you're dooming them. >> at least you fixed it in chicago. >> right. oh, yeah. >> we're going to have a lot more with sam as the program progresses. >> that was great. >>> coming up the activist investor behind names like jack in the box, and chico's, blue harbour's cliff robbins will talk about the environment and investments. >>> and toys "r" us announcing a price match guarantee for all of its products. one retail group is forecasting slower growth this holiday season than the last two years. we'll bring thaw story later this half hour. smart comes with 8 airbags,r3 a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. which can withstand over three and a half tons. when you take a closer look... ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this. and you don't want to miss it with thinkorswim by td ameritrade. you get knock-your-socks-off tools, simple one-click orders, real-time paper trading to hone your skills, plus anytime you need it support. ♪ stocks, options, futures, and forex. get your trading on track. thinkorswim by td ameritrade. trade commission free for 60 days, plus get up to $600 when you open an account. with the blackish-blue frame and the white dots and the splattered paint pattern, your lights are on. what? [ male announcer ] the endlessly customizable 2013 smart. >>> we're back this morning on "squawk." pension funds are under tremendous pressure to find value in a low interest raid world, beginning to respond to that pressure taking a more active role in their chechlts. joining success cliff robbins, ceo of blue harbour group a hedge fund that takes a private equity approach to the public markets. blue harbour manages over $200 million for the california teacher's state retirement system, he's an old partner of henry kravis and used to work at general atlantic as well. we had mr. ackman on before, he takes a different approach to activism. what are you doing? >> i think it's important to tease out the difference between active ownership which is what we do and activist investing. it's a little confusing. in the corporate world activism is different, it's aggressive, from our business. i've never done a proxy contest or sued a company. we're backing companies where there's scope to unlock value and identified companies to do so. >> if a company doesn't want to talk to you, you leave them alone. >> it's more about the quality of the conversation, if we are engaging with a company and they seem to be closed minded and not open to new ideas we would invest. if on the other hand they're interested in probing ideas and looking to are ways to win this could be a good opportunity. >> let's talk about pension funds. in this qe3 world where you can't make a buck with owning treasuries, what do you do? >> it's a big problem in the pension world and for institutional investors more broadly as bernanke has told us, rates are going to be low for quite some time, traditional asset allocation has some 25% to 30% invested in fixed income, putting pressure on fixed income in particular so they're looking for ways to make higher returns in the other parts of their portfolio and active equities, which is what the activists do and active ownership players like blue harbour do are providing real alpha and this is a solution and other thought leaders in the space are pursuing. >> so mr. zell predicted, i don't want to put words in your mouth but you did suggest we could be on the verge of another recession. >> absolutely. >> what do you make of that? how does that change your calculus if it does at all. >> i'm investing with a two to three-year horizon, we're looking for value over that time period and i've been investing for about 25 years. i've never seen such a high spread between the cash return in the market and the risk free rate so i'm over a two to three-year horizon i'm seeing the economy healing and -- >> the real economy, not just the stock market bernanke economy. >> particularly in the small mid cap space we're investing, the companies tend to be less international and tend to be doing well. most, if not all are having record earnings this year. there's much so be worried about in the economy but the underlying economy is healing. >> you're talking about the consumer strength basically? most companies are consumer oriented. >> the consumer has been strong, industrial manufacturing has been strong, software has been strong, you know, it's -- i'm not generalizing the whole economy but our job is to find value in the market and certainly our companies are building cash flows and where they're importantly finding ways to unlock the value. >> joe is a fan of jack-in-the-box. >> i am. in contrast -- >> i am a fan of chico's. >> in contrast to other fast food chains although there aren't many i'm not a fan of. >> that's obvious. >> i like jack-in-the-box, too. the play on jack in the box, they used to have a corporate parent in the day so they wind up opening their own stores. >> they called it food makers. that's how stupid they were. >> they owned 70% of the stores so they had a low return on a capital vested business model and almost everyone else is a franchise model because the stock market will have a stream of royalties than an asset intensive real estate business. what jack in the box has done is gone through a conversion and they've sold off their stores to their franchisees and now by the end of this year they'll be 70% franchise model versus 70% company owned and taken those hundreds of millions of dollars that they got from the sale of those stores and repurchased their stock at a low valuation. they also own qdoba, a fast mexican business which is growing significantly and a hidden asset inside of jack in the box so it's a combination of conversion to a franchise model, buy back a lot of stock and highlight the value of qdoba. >> cliff we have to run but one question, i wrote a column in "the times" private equity, used to be in the business about the trillion dollars of dry powder on the balance sheets right now. do you expect to see a wave of m&a in terms of especially some of the companies you bought? >> absolutely. >> he's nodding his head no, by the way. >> the magic word is extension. >> extension. >> that's what was missing from your article this morning. >> i talked about extension. >> the first line should have been extension. >> extension, extension. >> what i can tell you about our companies and then i'll answer your question more broadly in the market. i've been a partner in j care general atlantic and our approach to investing if we're a private equity fund would we buy this company and instead of paying a big premium we're paying no premium buying sthaha in the market and becoming a lead stockholder. i see private equity looking at the same types of companies we're looking at. >> we have to leave it there but we'll have you back and talk more. >> sorr sourdough bread. >> and you like the animal prints at chico's. >> i do. it's not a high bar for me to like fast food. >>> pledging to privatize state-run companies, greece is finally taking the first step. [ male announcer ] for the dreamers... and those well grounded. for what's around this corner... and the next. there's cash flow options from pnc. solutions to help businesses like yours accelerate receivables, manage payments, and help ensure access to credit. because we know how important cash flow is to reaching your goals. pnc bank. for the achiever in you. >>> welcome back, everybody. americans are expected to spend more during the busiest shopping season of the year but they are displaying a little bit more caution as well. the national retail federation says it expects sales over the winter holiday shopping period to rise by 4.1% this year. that's more than a percentage point lower than the growth of each of the past two years but remember, you are coming out of 2008 and some big dips in the numbers there. this would, though, be the smallest increase since 2009. retailers depend on the last two months of the year for up to 40% of their annual sales depending on what their lines are that they're selling and the nrf is predicting merchants will hire about 625,000 holiday season workers. >>> when we come back, we'll have more from our guest host, sam zell and greece is taking the first step toward privatizing a state-run company. michelle caruso-cabrera will bring us that story with the details. >> this is a real estate deal, $81 million, small but symbolic, the ceo of the company that made the investment coming up right here on "squawk box." th 8 airba, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. 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[ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. ♪ >>> welcome back to "squawk box." chrysler reporting a september sales increase of 11.5% over a year ago, that's above estimates of an 8.5% increase, it's chrysler's best september sales performance in five years. among the stocks already on the move this morning, retailer express is under pressure after the company cut its fiscal third quarter earnings guidance. the company had an abrupt change in customer traffic in september and adds there was some improvement at the end of the month. and phosphate producer mosaic under pressure, $1.03 per share, 12 cents below estimates, hurt by lower volumes and prices. >>> michelle is here and we have a lot to talk about, after years of promilesses to privatize state-run enterprises, greece announced its first privatization deal in history and michelle caruso-cabrera joins us with a special guest. >> so two prime ministers ago, greece promised to do massive privatizations, raise billions and billions and billions of dollars. it's almost never happened. they have finally done the privatization of a mall. joining us is the ceo who has decided to make this investment, odyseus, you're lucky to be on, we have one of the most formidable real estate investors in the world with us sam zell, i'm sure he'll be interested in what you have to say. >> i just saw him. >> so $81 million and a mall, is this the deal, the right metric and why did you decide to make this investment in the state-run enterprise? >> first of all, there is a symbolic meaning to this privatization because it was the first one, performed by the state privatization fund, he said so many years of promising this, so for us, and for it shows our confidence to transforming the greek company. for us the deal made financial sense, the price was fair for our parties and we acquired the premise in the front part we have developed the shopping center so we want to develop the back part in a way that would be complimentary to the use of our shopping center that we have developed in the front. >> how big is the property, and how much did you end up spending, over 90 years, is it $81 million over 90 years for 73,000 square feet? have i got that right? >> that is correct. when we start developing the back part of the property we'll invest another 20 million euros to do it the right way. you can calculate at least 100 million euros. >> but over a very long period of time, right? sam zell, what do you think of this, when you hear the metrics on this deal? >> i don't know enough about the greek specific real estate environment. you're talking about paying $1,000 a foot for a 73,000 square foot shopping center. at least in the united states a shopping center like that would cost dramatically less. on the other hand 90-year financing terms aren't available in the u.s. so therefore you got to do a present value and determine what they're really paying. looks to me like for him it might be a great deal but in terms of greece, you know, present value of a 90-year obligation, i can't do my math quick enough in my head but i'd suggest it's worth maybe 30% or 20% of the face amount. that doesn't make it a bad deal and maybe this is symbolic, but you'd think if greece wanted to do something, they would privatize the railroads or privatize the electricity or privatize something where the act itself would dramatically change the environment. this doesn't do that. this may be a wonderful transaction for this gentleman, but i don't know what it does for greece. >> he brings up a great point, mr. anathasios, people talk about privatization and greece they talk about the railroads, the oil company, et cetera. can this really be symbolic or is this simply the troika, the government of greece trying to please the troika so they can get that next 30 billion euros worth of bailout money that the country so desperately needs? >> no, i think it's more than a symbolic view or a first step as we said before and actually the time plan we have as a next step for greece the privatization of the company and there is a company schedule to be privatized and i think no matter what we say here that actions are louder than words and over the next three or four months we'll see where this goes. the thing they can say is that we seem to see a real determination from the prime minister and some of the key members of the cabinet, like the finance minister or the minister of development to want to go ahead with the program, and i hope my judgment is right because this is crucial for the country. >> are you convinced that greece is still going to stay in the euro a year from now? >> i'm convinced that the government and other important players in this are determined to stay and this will do whatever they can because they think this is our last chance to stay in the only place where we have a chance to be a successful country. >> many people say you should absolutely lead, leading economists say you should do that, your labor and property and everything else would be cheaper and far more likely to get investors. why don't you buy that? >> i tell you my opinion of this, labor is an important part of the cost of any product but if you put the numbers down the labor cost is only a fraction of the cost in most products we produce here and on the other hand we have other sources in which greece is rich, i'm not talking about natural resources. i'm talking about industries like the tourism industry, we haven't exploited the full potential, we have alternative source of energy like solar energy or wind energy, we have agricultural output that we don't take advantage of, so there are ma so many resources and opportunities in greece, it's not a matter of the private sector doing poorly or a lack of resources, but it's rather how the state is operating, we have a big public sector as you know, we have tax evasion and we have no privatizations. if we change these things if we're not a state controlled economy but instead a private controlled economy we can see a different picture and to me by staying in the european union this is where we should concentrate. it's not how much you value the currency or you divide the labor cost but what kind of economy you are, where you wish to go. >> that's similar to the debate we seem to be having here in the united states. thanks so much for joining us this morning and congratulations on your deal and good luck with it. >> thank you very much. >> thanks for playing, sam. that was helpful. good to have you on the set. >> just look at that shot, crumbling infrastructure everywhere. they've neglected things for -- >> thousands of years. >> it's a beautiful building and they're going to put gucci and apple and everybody in it. and they're all going to buy it with overvalued euros. >> exactly. much more still to come, thanks, michelle. >> you're welcome. >> from our guest host, sam zell and don't miss "squawk box" tomorrow, we'll talk to the ceo of mondeles, formerly kraft foods, irene rosenfeld, since the company left the dow jones industrial average after the split. 2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to tdd#: 1-800-345-2550 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-800-836-8799. for the spender who needs a little help saving. for adding "& sons." for the dreamer, planning an early escape. for the mother of the bride. for whoever you are, for whatever you're trying to achieve, pnc has technology, guidance, and over 150 years of experience to help you get there. ♪ to help you get there. thank you, mr. speaker, uh, members of congress. in celebration of over 75 years of our government employees insurance company, or geico...as most of you know it. ...i propose savings for everyone! i'm talking hundreds here... and furthermore.. newcaster: breaking news. the gecko is demanding free pudding. and political parties that are actual parties! with cake! and presents! ah, that was good. too bad nobody could hear me. geico. fifteen minutes could save you fifteen percent or more on car insurance. >>> welcome back to "squawk box." we have a great guest host, equity group investments chairman sam zell. sam, at the top of the 7:00 hour, for anybody who wasn't awake yet, hadn't tuned in yet, you talked about how you do corporate enterprise installations, and when you watch those things and you see delays that signals a recession is coming. what do you see specifically? >> i see we have a company that is in the business of creating enterprise, in other words, providing an enterprise service, where they complete a whole package of stuff. and one of the signs that they have of where we are, is when they see all of these projects start to get delayed, that's usually one of the first signs that we're heading into a recession, in other words, instead, the project was supposed to be done in three months and now somebody at corporate says well we'll postpone it for nine months and you start seeing that, and we see that in a lot of our companies, not just that one. >> where is it happening, around the country? >> everywhere. maybe except texas. but what we're seeing is that i'm not as optimistic about consumer spending for the end of the year. i think the environment is tough, and the confidence is low, and when you have a tough environment and low confidence, i've been somewhat, i don't want to use the word depressed but become somewhat of a pessimist. the one thing sam has been is the giant optimist, the bottom of every market sam is buying stuff. and my problem, and then i had this epiphany and i said you know the problem is, if my assessment of the realities are such, everything is massively too expensive. in other words based on the fiscal cliff and all of the head winds the stock wins should be 9,000, not 14,000. the stock marked is getting bullied by qe7 or 8, whatever number it is so we're creating artificial numbers that i don't think the underline will support. >> if barack obama is reelected, would that put you in a state of you might be dprelsed a little bit longer probably, wouldn't you? >> well i just think it would be a continuation of how i am today. >> what do you think right now, are you, do you think he'll be reelected at this point? >> i'm not a political prognosticator. >> off camera you wouldn't say yes or no? you don't know? >> i don't think barack obama has been the best president we've ever had. i frankly think that he has been one of the poorer presidents we've ever had. from my perspective i would be happy if there was a change. >> say he gets reelected and four years from now, can we still, you know, pull back on some of the shift towards an entitlement state that comes through the next few years? do we still have a chance to right this ship four years from now? >> i think the re-election of president obama would likely make righting the ship much more difficult. >> four years from now. >> four years from now. we talked about structural in the economy, we're also going to talk about structural within the agencies. eight years of lisa jackson at the epa is something to be really concerned about. eight years of this nlrb, we could be reunionizing the whole country and somebody would write a bill says you can't have right to work. >> say romney wins, how quickly, in your estimation, do things turn around? what happens? what is the shift? to the extent, can you impact any of this? >> that's the caveat i was going to give you. >> i think whoever is elected president in a month from now, they will have to do major, major stuff. obviously you got two different ideologies, and i think if romney were elected, he's going to have to do major stuff, absorb major pain, but hopefully create a base from which the country can grow again. i don't think increasing meld i care is going to increase the growth rate of the country, and create more jobs, as an example. >> flip it around. if you take some of those things away, there is an argument to be made, and maybe you don't agree with it, there's going to be some pain at least in the short term. what does that do to the economy, in your views on where we ultimately go? >> i basically think that the last five years has been all about somebody sticking your finger in the dike. they didn't solve the problem. they stuck their finger in the dike and we know the dike's eventually going to go. and so all i'm saying is we have to address and solve problems. we have solved very few problems. i think time is up for whoever wins. the question is, how will that person react? we saw president obama lose big time in 2010, and as opposed to bill clinton who moved to the center, he moved further to the left. how will he respond if he gets reelected? that's a little scary. and i don't know how much further to the left he could run. >> was kicking the can down the road the right thing for a while? you say putting your finger in the dike, the hope was that the waters would recede some so that when it did burst it wouldn't be quite as bad. >> you stuck your finger in the dike because you were afraid to do what every scenario requires. you've got to clear the market. if the single family housing market had been allowed to fail as you would use your term we would have a viable, terrific housing market today, because it would have cleared. by virtue of not allowing it to clear, we have 4 million or 5 million houses in purgatory. >> the foreclosures. >> all of that stuck because nobody was willing to say, a is a, b is b, face up, next. let's reclaim up. let's suffer and go forward. let's build tomorrow. policy that doesn't acknowledge reality has never succeeded in the history of the world, and that's really the policy of the last four years. it's been stick your finger in the dike, hope for something good to happen. >> what worrole do you think be bernanke has played in all of this? >> the idea of all of this massive amounts of liquidity, each time he increases it, the impact is less and less. you would think that maybe it's time to think of it, you know, another solution, because it ain't working. we've had, i don't know, three or four qes. >> the third. >> we bought cars from people at inflated prices and encouraged them to buy houses, did all of these things and nothing worked. if it was your life or my life, we would have changed things three years ago, right? >> right. >> you wouldn't have sat there, well i'll just suffer until -- like the 2000-year-old man by mel brooks, oh, yeah, what happened? i got run over by a chariot. what'd do you? he said i laid there until i got better. i didn't have insurance. my point being that's not a solution. you've got to take action and you've got to face up to reality. that's all. it's not complicated. it takes a lot of courage and it's going to break a lot of eggs, but don't you think it's time to break some eggs? for everybody. >> we're going to have more from sam zell in just a few minutes, again he's been our guest host for the last hour and 45 minutes and we've got him for about 13 more minutes. >> bringing us some very compelling -- we got a lot more talk about, compelling views. coming up stocks to watch, we'll check in with jim kraimcramer a nyse. tomorrow our guest is james tisch, president and ceo of loews corporation. 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[ male announcer ] the endlessly customizable 2013 smart. >>> welcome back to "squawk box." jim kramer is standing by at the new york stock exchange. did okay yesterday, indicated higher today. it's still working, jimmy? >> yes, it is. the money is still coming in. this is about qe-7 or 8, i have been riveting all morning. what mr. zells said is similar to what steve jobs said before passing away. this is a country where it is just too hard to do business in. >> yeah. i was going to say, you're not much of a golfer guy but a tennis guy, right? >> ryder was just a collapse. >> yeah. we let pollster on -- for me it was going to a shrink or something. it was come peopling but my heart was racing, i had butterflies in my stomach and didn't think it could happen. when it did, i felt hollow after it. >> i had a bunch of guys going to the eagles/giants game. you would have thought either of the games would have been talked about. the ryder cup is all i heard about. people felt bad for america. it was a patriotic thing. >> for one eagle moment, i just thought, i don't know, ma lays, i thought, we can't do this right. >> if they come in with cardigan sweaters the next time we see the golfers with the cardigan and have to start talking about turning down the thermostat, it is pool game over. >> all right. jim, thank you. we'll see you in a few minutes. >>> all right. we'll see jim in a few minutes at the top of the hour. when we come back, final thoughts from our guest host today with his take on emerging markets. and we have a big show tomorrow. the guest host is jim tesch, the chairman and ceo of mundelay foods. irene rosenfeld will be joining us since her company left the dow. and jim grant. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again. mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. >>> the stock of the day, i like to call it the debacle dejour of the day, for your fyi. it is down now. i know debacle dejour is wrong now, i'm still going to say it. the apparel retailer warning they will miss their third-quarter earnings as sales weakened in september. i guarantee i'll get e-mailers to say i used the word -- i even put another one on there. i think i'm back to regardless. anyway, are you going to lead us here, you have arianna coming in to back you up on thursday, but while you still have him here, give him some new york times. >> i want him to talk about the alan blunder piece because he did read it in "the wall street journal" today. do you think it is right or wrong? >> my first argument above that is law professors shouldn't be president. lawmakers don't make decisions, they show both sides. so we have to eliminate law professors and then eliminate ceos, too. if i had to make a choice of who i would want to leave the future to, a law professor or a ceo, it is not a hard choice. >> i'll ask you on taxes, yesterday you were on the paul ryan clip, but there is a debate over the romney tax plan, not that he's not going to lower taxes, he may lower taxes and that may be a good thing for the economy, but the question is ultimately does it bring in enough revenue to make it revenue neutral? one of the things they have said about republicans is it would lower the deficits but the taxes have exploded under them. your views? >> there's no question the deficits have exploded under them. the last two decades among the two wars and the mistakes in my opinion, we blew a lot of money. multiples of what we blew before. so, you know, my attitude is that -- >> jimmy, my question is do you have any confidence no matter who is in office that actually the hard cuts that need to be made ultimately to make any text plan deficit neutral are actually going to happen? >> and my question to you comes down to a simple question. >> do you believe in the tooth fairy? >> who does the president listen to? i wonder if you could name for me four or five executives who have been advising the president and that he's been listening to. okay, four. okay, three. okay, two. okay, one. i'm waiting. one name. >> well -- >> you would argue -- >> if you think general electric the irrelevant to what's wrong with the country today. >> we have steve case on the air a lot who makes that argument. i think you are probably more right than wrong. >> ubs was losing their clients because of their affiliate with robert wolf. yeah. >> the answer is i don't think there are any simple answers. i don't think there's any magic potion. i think the most important thing is we have to learn there isn't a magic potion. and i'm very much -- i'm not against raising taxes at all, okay? and that makes me different than a lot of players in the republican party. but number one, you raise taxes, you raise everybody, you lower taxes, you lower them on everybody. should we have tax reform?
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